Imagine if your company offered you six months’ worth of salary if you quit your job right now. Would you go? What if they threw in early stock vesting and health insurance for a year?
It’s a tough decision that workers are facing at various companies. Microsoft and NPR are two of the latest big firms to announce buyout offers, but it can happen anywhere — just ask state workers in North Dakota or employees of the Salt Lake City Public Library system.
Here are some things to consider.
“A $60,000 severance package sounds substantial until you calculate how quickly it evaporates when you’re replacing employer benefits out of pocket,” says Jeff Judge, a certified financial planner (CFP) with Chesapeake Financial Planners in Forest Hill, Maryland.
Look at your current savings — plus whatever you’ll get from your buyout — and determine how many months of job hunting that total will cover. Are they paying out your remaining paid time off? Is it enough time to find a new position?
“This is not just a onetime decision,” Bishop says. “It requires looking forward at cash flow, taxes, healthcare costs and long-term retirement income.”
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Consider your career prospects (and timing)
Also, was everyone at your level or on your team offered a buyout? If so, think carefully about waiting around too long.
“If your coworkers have similar skill sets and they hit the market first, they may be the ones to pick up any new positions coming in,” says Gene Camm, managing director of compensation resources at CPA firm EisnerAmper in Woodcliff Lake, New Jersey.
Think, too, about what’s going to happen to the workers left behind after the buyouts. If you stay, will your workload increase? Will you potentially be laid off? Or could staying create new prospects?
“There are a number of instances where it makes complete sense to really buckle down and stay where you’re at, especially if there will be additional opportunities opening up in roles of leadership,” Camm says.
Negotiate — and not just about the cash
If there’s wiggle room in your buyout package, there are lots of ways to ask for more. Beyond salary (which is the natural place to start), is there PTO that can be paid out? Can you ask for more months of benefits or company perks like a gym membership?
Think about it this way: If you take a buyout, you’re doing your company a favor.
“They’re doing this so they don’t have to be the bad guy,” Judge says. “You’re saving the employer that uncomfortable decision.”
If you’re close to a date that would qualify you for a bonus or a pension, you can ask for a later termination date. You can ask to leave with a positive reference letter. You may also be able to get your hiring contract changed if there’s any language that limits your work after you leave the firm.
Rich Hofmann, a CPA and CFO of Neil Jesani Tax Advisors in Sunrise, Florida, notes that you can ask for a modification to a non-compete agreement you’ve already signed, for instance.
It’s also not unusual for companies to include career placement services. If that’s not part of the deal, Hofmann says, ask about it.
Leaving a job is a big move and not one to be taken lightly. However much time you have to decide, use it fully.
“I’ve rarely seen someone regret taking a buyout they spent two weeks analyzing,” Judge says. “I’ve seen plenty regret the ones they signed in 48 hours.”
Also, declining a buyout doesn’t mean you’re stuck where you are. This just might be your cue to job hunt.
“It’s always easier to find a new job when you’re currently employed, because you don’t have to answer that question, ‘Well, how come you’re not employed any longer?’” Camm says.
In the end, a buyout may present you with an exit ramp, but make sure it meshes with your broader financial and career plans.
“Beyond the numbers, this is also a personal decision,” Bishop says. “Your satisfaction with your job, confidence in the company’s stability and readiness for a transition all matter.”
