4 Times Leaving Your Job for a Buyout Is (or Isn’t) Worth It
Written by
Nicholas Morine
Edited by
Rebekah Evans
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
With President Donald Trump’s administration having recently offering select federal employees the option of a buyout — or deferred resignation — as outlined by NBC News, the topic of when it is — or isn’t — worth taking the money and leaving is brought to the fore once again.
The risk versus reward calculation of leaving your job while accepting a buyout offer is often highly personal, but there are some universal considerations to take into account before making your final decision.
Also consider a side gig to make up for any lost income.
A Buyout May Be Worth It If You Hate Your Current Job
Perhaps it goes without saying, but if you truly resent or hate your current job, a buyout offer can certainly be tempting.
“[If you’re struggling to find] projects that are aligned with the type of work that you want to do and that’s causing you stress, I would say take the money and run,” said career expert Patrice Lindo, as quoted by Fortune.
If you truly dread waking up before every shift, it could be time to take the money and run.
Buyout Offers Can Disappear
One aspect of a deferred resignation, voluntary resignation or job buyout offer that is often overlooked: the fiscal capability of your employer to deliver on the agreed-upon severance, particularly if it’s taken over time rather than as a lump sum payment.
“Make sure they can honor what they promise,” Jill Evans Silman, senior professional in human resources (SPHR) and vice president of Meador Staffing Services told Monster Jobs. “We’ve all heard stories of retirees who have had their benefits unplugged. In today’s economy, having cash may not be a bad situation.”
Things Everyone Should Consider Before Taking a Buyout Offer
Although specific situations will surely vary from person to person, there are a few broad tips to keep in mind before accepting any buyout offer that will leave you on the sidelines for any period of time.
A small gap between your current age and planned retirement age is perhaps the ideal time to take a buyout offer. If you’ve got a few (or more than a few) remaining years in the workforce, deeper reflection may be necessary.
“If you take a buyout, there’s a temptation to not reapply yourself quickly into something else,” Silman said. “Time can get away from you and employers have issues with too much time out of the workplace.”
Health insurance and Medicare eligibility are also of prime concern.
Will you be eligible for Medicare if you leave your post? Will your current employer continue to contribute to your health insurance for any period, going forward? If you can continue to on your employer’s health insurance policy through COBRA, what’s the bottom line in terms of your expenditure?
“If you’re not eligible for Medicare, getting health insurance on the open market can be next to impossible, because almost everyone has some pre-existing condition that’s going to knock them out,” explained Lita Epstein, author of “Surviving a Layoff: A Week-by-Week Guide to Getting Your Life Back Together,” as quoted by Monster Jobs.
Finally, the current labor market is mixed in terms of its openness to hiring. The most recent National Federation of Independent Business (NFIB) survey revealed that small businesses were having a very difficult time finding qualified applicants to fill job postings and the U.S. Chamber of Commerce indicated that the number of job openings far exceeded the American labor supply.
“We hear every day from our member companies — of every size and industry, across nearly every state — that they’re facing unprecedented challenges trying to find enough workers to fill open jobs. Right now, the latest data shows that we have 8 million job openings in the U.S. but only 6.8 million unemployed workers,” said Stephanie Ferguson Melhorn, senior director of the U.S. Chamber of Commerce.
“We have a lot of jobs but not enough workers to fill them. If every unemployed person in the country found a job, we would still have millions of open jobs,” she added.
Make Sure You Weigh All Your Options
Certain sectors are struggling more than others. As NFIB data underscored, you may have an easier time filling open roles in the construction, transportation and manufacturing sectors as opposed to seeking a position in finance or agriculture.
It may be worth taking a buyout offer if you can easily move into a sector you’re credentialed in and which is crying out for labor, but it could be wise to stay put if your experience lies in a highly competitive industry.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
