If you are in a position where your company is offering you a buyout offer, the decision can be a tough one to make. This is something that more and more people have to contend with and is not a simple decision. The biggest obstacle that most people are facing is in regards to their financial situation. Most concerns regard the ability to remain in good financial standings if they do accept an offer and cannot get another comparable job. Whether you decide to accept the buyout offer or not there are pros and cons that go along with either choice.
Pros to accepting your company’s buyout offer
For someone at the end of their career, accepting your company’s buyout is can serve as a bridge between an early retirement and when you planned on retiring. At the age of 59 ½ you can begin drawing money out of your 401k and IRA without incurring any penalties and at 62 you can begin collecting money from social security, so accepting buyout if you are thinking about retiring and in a certain age bracket could allow you to bridge the gap.
Another draw to accepting your company’s offer is the option to switch careers and this can give you the opportunity to do so. When you are presented with a buyout offer, you can always negotiate the offer and leave on your own terms, and many people take full advantage of this and use it as a leveraging tool, but you should be careful with trying to negotiate.
Cons to accepting your company’s buyout offer
While a buyout offer may look like appealing upfront you should be careful in choosing to accept the offer because when the amount of money is broken down, it is not that large of a sum, and depending on how you handle the money and what you decide to do with it, this could be a negative option.
If you are still thinking about accepting an offer you should take health care cost in consideration. Now that you are no longer with your employer, you no longer have the option to get insurance that comes along with most jobs. You now need to go find your own insurance which for a family could become a costly venture. While accepting their buyout offer could look appealing, if you are not at an age where retirement is an option, finding another job could become challenging.
While there may be some perks there may also be some concerns that come with accepting or not accepting your company’s buyout offer. You have to fully understand your individual situation including your financial situation along with your personal and profession situation. Your financial advisor can help you make an informed decision by running financial projections to see if the numbers make sense for your specific circumstances. Once looking over the pros and cons for each situation your decision should become clear.
At Magellan Financial, we can answer any of your questions. We will help develop a plan to make informed decisions by understanding your financial situation. To schedule an initial consultation or learn more about how Magellan Financial can help you plan successfully, please call us at 610-437-5650 or email us at Jon.Soden@wfafinet.com.