Two years ago, N.C. Mutual Life Insurance offered Abraham Daye an early retirement package.
He turned it down.
But when the company came back last year and asked again, Daye took the offer.
"I think that the first time, I didn't even consider it," he said. "I didn't even think about it. ... But after 2008, the economy got worse. The second time, I said I better grab this opportunity because of the possibility of getting laid off."
Taking the plunge was a tough decision, though. Daye worried about whether he and his wife would have enough income in retirement. He worried about paying for any emergencies and he worried about giving up a stable job.
"I think my major concern is the fact that I've been accustomed to a 9-to-5 all my life," said Daye, 60, who lives in Butner. "What am I going to do to keep myself active? Plus, I was doing something that I really, really enjoyed doing. With today's economy and the job situation, anybody who has the opportunity to have a job is really sticking with it, and here I am getting ready to give my job up."
It's a situation thousands of local workers will face as the economy remains shaky. In this region, state agencies, universities and businesses of all sizes are looking to do more with less and trim their budgets. Early retirement buyouts are popular ways to prune staff.
As just one example, officials at Progress Energy and Duke Energy plan to offer retirement packages as the utilities combine operations in their multibillion-dollar merger.
Depending on your situation, this opportunity could be devastating or exhilarating - an unwanted parting of ways or a chance to make a new beginning.
But before you go signing an agreement for a buyout or early retirement package, consider more than what you will do with your days off.
Workers should evaluate their personal finances, their work-life balance, the implications of such a move on their careers and the legal jargon within the agreement itself.
"People really need to sit back and take into account what is happening," said John O'Connor, career coach withCareer Pro in Raleigh. "Sit back, listen, take inventory. It is not a time to react emotionally."
It is time to get good advice.
We talked to five people - a financial planner, a lawyer, a career counselor, a human resources expert and someone who made the move - about the questions you should ask yourself and your company before you agree to walk out the door.
Expert: Oliver Pursche of Gary Goldberg Financial Services in New York
What's the alternative?
"Our personal experience is that those that have turned down buyouts often end up getting a worse-off deal within a year or two. ... When a company offers a buyout, it's because they want to reduce the work force, and if not enough people take it, then the layoffs start."
How are your finances now?
Look at the sum of your savings and retirement accounts, plus whatever the buyout package will contribute.
"If you're used to living on $75,000 a year and your buyout is $100,000, and that ends up being all of your savings, then after taxes, that means you've got less than a year's worth of expenses in hand."
How much does it cost you to live?
"Most people say, 'We probably spend $350 on groceries and a couple hundred on cable and telephone,' but they really don't know. It's really looking back and going through and really identifying how much life is costing you."
What would an emergency do to your finances?
"It's every easy to say I live on $40,000 a year and I have $100,000 in the bank, so I have at least two years of living expenses," he said. "But what if you get sick? What if the roof collapses and needs to be replaced?"
How will your budget change?
"If you have a long commute, you no longer have it. But the flip side of that is, if you happen to live down the street from your office or just down the road, you have to think in terms of what happens if my next job is 20 minutes away? What does that do to my budget?"
Also, "Itemize all of your expenses, including the things you get for free at the office and maybe take for granted that you won't be getting for free anymore."
Expert: William Joseph Austin Jr., attorney with Ward & Smith of Raleigh
What is your standing in the company?
Think about the reasons that you may have been selected for the offer. Think about anything you may have done or any incident that would make your employer want to eliminate you or your position. This doesn't necessarily mean you're going to file a lawsuit, but it's an important question to ask yourself.
What are your rights?
Under the Worker Adjustment and Retraining Notification (WARN) Act, an employer with more than 100 full-time workers must file a notice with state regulators and give workers 60 days' notice of a plant closure or mass layoff. Older workers may also be protected by the Older Workers Benefit Protection Act, which requires employers to provide a breakdown of the ages of employees being terminated and their jobs.
What does the agreement say?
Don't blindly sign. Make sure you know what will happen with "nickel and dime" issues like your accrued vacation time, any paid holidays you are due, etc.
"Anything that has accrued to your benefit that is not subject to written forfeiture should be addressed," Austin said.
Do you qualify for unemployment benefits?
In most cases, employees that take a voluntary separation package can apply for unemployment benefits. However, you will not be able to get benefits until your severance package runs out. The state generally takes the amount of your severance, divides by your weekly salary and comes up with a number of weeks that the severance should have covered. Only after that time has passed can you receive unemployment benefits. However, you will still be eligible for the normal number of weeks of unemployment benefits once you start receiving them.
Expert: John O'Connor of Career Pro in Raleigh
What benefits come with the package?
In some cases, you may be able to keep your health insurance for a period after you leave the company. If the agreement doesn't specifically state this, try to negotiate for it. Or, you may be able to pay a certain amount to remain on your company's plan. If all else fails, find out when you will become eligible for COBRA (which allows you to temporarily continue your health benefits under group rates).
What if you come back?
Many companies will re-hire former employees or hire them as contractors after a buyout. If you think this is likely, ask about the ramifications of coming back to work for the company. Will you have to pay back part of the buyout package?
What are your skills? And what do they mean in the marketplace?
"You have to think about how would your skill set compete with others," he said. "You see Nortel, IBM, Cisco, Sony Ericcson. There were a lot of people put on the market with similar skill sets. Those people are going to have to compete with each other for new jobs. You might underestimate your ability to find a new position."
Do you have a plan?
If you are not retiring and plan to seek a new job, make a proactive plan about what you will do with your time off.
It's all about your attitude, behavior and how productive you can show your employer that you've been during that time period. You've gone and finished a degree, published something, worked for less money but gained new skills. ... "When you take a buyout you feel like in some ways you're a failure, but in most cases, that's absolutely not true."
Work and life
Expert: Sylvia Hackett, vice president of human resources, Rex Healthcare
How will this impact me psychologically?
Understand that taking a buyout is more than just cleaning out your desk and walking out the door.
"You may be disconnected from people who have been a big part of your life and your career," she said. "You need to think about what that means emotionally."
What kind of support can I get?
Your employer may offer counseling or assistance for departing employees. If it's offered, use it. If not, seek counseling. Or, you may be able to find a support group for workers in a similar situation.
"That's doubly good because such groups also serve as a resource and a network for future career opportunities," she said.
How can I keep upbeat?
"If you are healthy, working out regularly, eating well, don't change that," she said. "A lot of times your work environment supports those things. It's important not to put those things aside."
Time and money
For most folks who take these offers, the two top concerns are having enough money and figuring out what they will do with their spare time.
Dianne Dunlap took a buyout from Cisco in 2009.
The hardest thing for her was figuring out how much she and her husband actually spend each month and keeping spending under control on a more limited income.
"After retirement, I had to think about things like, this is how much I have coming in and this is how much cash I can take out of the bank, and how much I can afford to put on my credit card," said Dunlap, 58, of Raleigh. "I never really thought about what I was spending before."
For Abraham Daye, his No. 1 fear - that he would be bored in retirement - turned out to be unwarranted.
Shortly after accepting the early retirement package, N.C. Mutual Life offered him a part-time consulting job. He now works three days a week and spends the rest of his time fishing, doing yardwork and "doing all those things I've been wanting to do for the last 30 years."
His best advice to folks trying to make a decision: Take the full amount of time you are given to review your options and think about your decision.
"Having 30 days to think about it really helped," he said. "I was able to weigh all the situations and go through a lot of scenarios. If I'd only have had a week, that would have been really frightening."
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