How to Manage a Retirement Plan Buyout

How is your Spring? 

Have you or someone you know been impacted by the recent Scana and Dominion Merger?

If so, you may have been offered a buy out from Dominion  

What is a buy out?

A buy out is an offer for you to retire or leave the organization

early. To encourage employees to leave, the employer (Dominion)

will offer a voluntary severance package. 

As with most large firms, employees make up the largest cost. In order to reduce costs and avoid layoffs the employer will offer a voluntary severance package. Often times, these buyouts are offered to employees getting close to retirement age, who can be replaced with younger, lower paid workers.

So, rather than paying expenses and possible reduction costs, a company like Dominion might offer this as

way to encourage folks close to retirement to retire early.

A lot of offers will give you a specific number weeks pay to retire early. For example, you may earn one extra week of pay for each year that you have worked

at the company up to a maximum limit.

So what should you do?

 1. Check with your HR folks  

Make sure you understand what you are being offered. There are many different ways to structure an offer, make sure you understand all the details so you can know what your next move will be.

2. Check with your financial advisor, CPA and legal advisers.

Are you ready to retire ? 

Do you have a plan ?

Will you continue to work ? 

Are you married ?

A financial advisor can take a look at your whole financial situation and create a road map for your retirement.

Most financial firms have software and programs that lay out a future cash flow plan, which can help you manage your finances in retirement.

You will also want to meet with a CPA and a legal advisor to find out what the tax and legal ramifications are of your deal.

2. Check the fine print of the offer 

What are they offering ? How might it help. 

If you are in good shape financially and you were going to retire in the next 12 to 24 months, 

you may want to take the offer. 

If you are behind on your saving and you can't afford to retire, you may need to pass on the offer. 

Also keep in mind, that some buy outs are optional. If the company doesn't get a lot of takers, they may offer a higher offer or they may just reduce head count by other methods. 

Everyone's situation is different, so make sure to do your homework before making a final decision.

Some questions you may want to keep in mind:

Will you keep your health and other insurance benefits if you retire?

Will you receive a pension? 

How close are you to getting social security?

Is your home paid off? 

How is your debt structure?

Is you spouse employed? 

Are you going to work part time?

You will need to factor in a number of items to make 

your plans. Talk to your family, your HR folks, your 

advisers before you make a final decision. 

__________________________________________

Michael Oana is a Certified Retirement Counselor?

with Michael Oana Retirement Planning Specialist

His firm has been providing Retirement Planning

For Columbia's Corporate Managers. To schedule 

a no obligation Strategic Second Opinion, pls call us 

at 803-790-8989

Michael Oana Retirement Planning Specialist

Retirement Planning For Columbia's Corporate Managers

4408 Forest Drive Suite 2001

Columbia, SC 29206