Should We Take The Buyout?

**sweeps** · 02-19-2008, 08:52 AM

Sorry, not enough information. Just a few questions we would need to know the answer to:

1. What are your current and future expenses? For example, someone who travels extensively has different needs than someone who wants to sit home and read year round.
2. What are your goals? For example, do you want to pay for your grandchildren's education? Do you want to leave a large inheritance to your children?
3. Do you and your spouse plan to work somewhere else if you take the package?
4. How old are you? Are you eligible for social security?

**CouponAddict** · 02-19-2008, 09:04 AM

Originally posted by questions View Post

Here's where it gets questionable, we have the potential to make (both of us) appox. 120 thousand a year if we stay. I do not want to leave without my wife. What do you think we should do?

How long would you stay for if you were to stay and if you stayed only a year or two then desided to go would the buy out still be available?

**jIM_Ohio** · 02-19-2008, 09:23 AM

Originally posted by questions View Post

I have worked at Ford Motor Co. for 35 years and my wife has been there for 15 years and we are considering the buyout packages that are being offered. 100 thousand for her, and 50 thousand for me. We are debt free except for our home. We owe 80 thousand on our home. We have appox. 50 thousand cash and I will receive 36 thousand a year pension and full health care coverage for the both of us. Sounds like a good deal? Here's where it gets questionable, we have the potential to make (both of us) appox. 120 thousand a year if we stay. I do not want to leave without my wife. What do you think we should do?

You need to look at it this way:

How old are you?
How old is wife?
How close to collecting social security are you?

I am guessing you are in your 50's, maybe early 60's.

What is your current income? Guessing 120k per year.
What are your currently yearly expenses? Guessing 100k per year. This number is REAL important.

What do have set aside for retirement in 401ks, IRAs and similar?
I am guessing little (you did not specify anything). If you have in neighborhood of 2.5 Million, you are in excellent shape.

Here is how I would look at it (using the numbers I have available and some guesses)

100k income need (this is whatever your yearly expenses are).
36k pension income

64k needed from other sources
15k social security benefit

49k needed from other sources.

So you need to either
a) cut 49k from a 100k spending budget
b) have 1.2 Million saved to account for the 49k per year
c) do a combination of a) and b)

You have 200k cash (150k buyout and 50k you said you had set aside). This 200k covers 8k of expenses per year.

Generally a person can tap into 4% of their assets per year to retire. The 8k is 4% of 200k.

**InDebtInDC** · 02-20-2008, 07:10 AM

If my employer offered me 130% of my annual salary as severance pay, I would take it, but my retirement horizon is much further away and I can get another job relatively easily.

**scfr** · 02-20-2008, 11:22 AM

Please check out page D2 of today's "Wall Street Journal." There is an article titled "How to Value the Buyout Offer."

If you don't have access to it at home or work, check your local library. If it's not available there, I'd say that given the decision you must make, the information offered in the article would be worth spending $1.50 for a single issue.

This is a question that only you can answer for yourself, because only you know all of the variables about your life and what you would do if you did take the buyout.

**Scanner** · 02-20-2008, 01:08 PM

In short, all these questions are important.

Just guessing, merely guessing, it sounds like you don't have enough of a cash/investing cushion.

If you have another career you will be entering. . .then by all means do it.

Should We Take The Buyout?