Javascript is not enabled.

Javascript must be enabled to use this site. Please enable Javascript in your browser and try again.

Skip to content
Content starts here
Leaving Website

You are now leaving and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply.

Buyout Offers Raise Important Issues for Older Workers

Their decisions can affect Social Security payouts and health care costs

spinner image 91624842

General Motors’ recent announcement that it would offer voluntary buyouts to 18,000 salaried workers was a reminder that even amid a booming economy, some companies still try to trim their labor expenses and boost their bottom lines by encouraging employees to leave. According to a new report from outplacement firm Challenger, Gray & Christmas, U.S. employers announced in October that they plan to cut 75,644 jobs, the most in more than three years.

spinner image Image Alt Attribute

AARP Membership— $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

Join Now

For older workers close to retirement, the decision on whether to accept a buyout — or stay put and risk being laid off — can be a difficult one that potentially affects their retirement income and health care expenses. That’s why financial professionals advise them to carefully weigh pros and cons and try to negotiate a package that’s best suited to a worker’s circumstances. 

Kurt Hemry, president of Ironwood Wealth Consultants in Portland, Ore., reminds older workers that taking a buyout has potential Social Security implications. “Benefits are based on your 35 highest earning years. For most people, their income is higher at the end of their career, so not having those higher years could lower your future Social Security benefit,” he says.

It’s also important to consider how a buyout could affect health care costs. “If continued medical insurance is not part of your parting package, then you must add this new expense to your monthly budget,” Hemry notes. 

See more Health & Wellness offers >

Hemry says a worker negotiating a buyout must decide whether more money or benefits is more valuable. “Perhaps your spouse is employed and you can have medical insurance on their plan,” he says. “In that case, go for the money. Or it’s the other way around, and you really need the insurance coverage more than the money.”

Discover AARP Members Only Access

Join AARP to Continue

Already a Member?

spinner image membership-card-w-shadow-192x134

Join AARP today for $16 per year. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP The Magazine.