When Should You Accept a Buyout?

With 125,000 GM and Delphi workers now weighing this decision, there are several important factors to consider. Here's a look.

General Motors Corp., along with its former subsidiary, Delphi Corp., are the latest major companies to offer early retirement incentives as a way to trim their workforce and cut costs. On March 22, the companies announced that altogether they would offer buyout packages to more than 125,000 union workers, making this one of the largest offers of its kind in U.S. history.

The decision is now in the employees' hands. But how do you know if a buyout is a good deal? It depends on how close you are to retirement, says Mark Cortazzo, a financial planner and senior partner with Macro Consulting Group in Parsippany, N.J., who has evaluated scores of buyout proposals for clients who worked for major telecommunications and pharmaceutical companies.

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Mary Beth Franklin
Former Senior Editor, Kiplinger's Personal Finance