Can You Retire if Offered a Buyout?
When a company offers a buyout to employees — sometimes before following through on the prospect of involuntary layoffs — many variables can factor into the decision to accept or reject the offer.
Not all buyouts look alike. If the recipient of a buyout offer has a company pension, pension benefits could start sooner than scheduled. Compensation distributed in a lump-sum amount or as installments over time also could be offered. Company stock options are another possibility.
Another important variable, especially for those nearing retirement, is the age of the person considering accepting a buyout. Even for people in their 60s, a buyout can be a difficult proposition. If still in their early 60s, the buyout may not be altogether attractive because a considerable gap exists between both the time someone can go on Medicare and, even later, reach full retirement age for Social Security benefits.
In other words, you must weigh several considerations carefully to determine if the buyout makes sense. Unfortunately, such considerations could become more prevalent if companies
continue to struggle from the economic fallout resulting from the COVID-19 outbreak, which hit the United States in March 2020. In just the nine-week period from March 14 to May 16, 38.6 million unemployment claims were filed as the nation’s economy practically grounded to a halt.
We want to elaborate on the issues a buyout can present by raising six pertinent questions you should ask yourself, and quite possibly a financial professional if you are offered a buyout.
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