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When to take separation package, when to pass

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Published  November 6, 2020 11:58am EST
Consumer
FOX 5 Atlanta

Should you take the severance package?

Since the end of the summer, many companies have started to announce voluntary cuts to trim their bottom line.

ATLANTA - Since the end of summer many companies have started to announce voluntary cuts to trim their bottomline. Two big names in Georgia have done this. 

The airline industry is clearly hurting and that will be a problem for years. Last month Delta Airlines furloughed a few thousand pilots while also offering prior to that early retirement and buy-out offers. Coke, which supplies now shuttered restaurants, has offered separation packages to 4,000 employees. But do you take it or wait and see if you might end up cut anyway?

Well, first you have to determine if you are marketable. Some folks will says, sure I can find a job with my skill set easily. Then maybe you take the money and run. But that’s not every worker out there. I talked with Lisa Brown, a certified financial planner, at Brightworth.

"Others say, given my skills, they’re very unique, it could take a year or more. So, if the severance package is only going to cover you for three months and you think it might take a year, you might not raise your hand to take that package and kind of hold your breath and see how it goes."

Usually these severance packages come first. If enough folks don’t take them up on it, lay-offs are next. So now is the time to know what your expenses are. Make sure you have three to six months in savings. But, if you are already nearing retirement, this could actually be a great offer. 

"If they were only going to work another few years, this package might bump them into retirement right now," Lisa Brown added. In some cases this can be a very good thing for people."

Here are a few questions that need to be answered when considering whether to take a severance offer. 

How will you get paid? One lump sum, or will the money be spread out over a few months like a paycheck. 

Health benefits. How many months of COBRA will the company pay for. If it’s three months, can you pay a few months on your own and still job hunt?

Check out your 401K. Have you maximized that at your job? If not, do it before you go. If you are under the age of 50, you can put $19,500 in their annually. That is $26,000 if you are 50 or older. 

Finally, go over to LinkedIn and refresh your bio. Reconnect with people. See who is hiring and who isn’t. This might help you to determine your market value. And in the same vein, freshen up that resume.