By Andrea Coombes,MarketWatch

SAN FRANCISCO – If your employer offered you $140,000 to quit your job, would you take it?

Workers at General Motors and Delphi will be mulling that question in the coming weeks, now that the auto manufacturer has offered some workers $140,000 to quit working.

While GM’s offer is more generous than most, such packages are fairly common at companies trying to cut costs. For workers, the question always is this: Does it make financial sense to take the money and run?

While the likelihood of the company’s long-term survival and future layoffs are two key considerations, workers should first assess their personal financial situation.

A major part of that calculation is the size of the lump sum your employer is offering. By all accounts, the General Motors offer is among the most substantial.

“You don’t see them this lucrative very often. This is kind of off the charts,” John Challenger, chief executive of Challenger, Gray & Christmas Inc., an outplacement consulting firm in Chicago.

A full-time assembler at GM is paid about $57,200 a year, not counting overtime, or health or other benefits, according to the United Auto Workers union.

If that worker has been on the job for, say, 11 years, he or she could be eligible for the $140,000 lump sum.

That amounts to more than 11 weeks of pay per year of service. By contrast, in most voluntary buy-outs, companies offer executives two to four weeks of pay per year of service, Challenger said.

Middle managers and knowledge workers can expect one to two weeks of pay per year of service, and hourly workers receive one to two weeks of pay per year of service, he said.

But some companies’ payouts are as low as two weeks of pay for every five years of service, said Rob Ashmore, a senior partner with Fisher & Phillips, a national employment and labor law firm, in Atlanta.

“In general, it would be nowhere near the kinds of dollars” GM is offering, Ashmore said.

The insecurity that arises at the thought of quitting one’s job and attempting to survive on a single lump sum makes many workers fearful of taking the leap. But though the financial outlook can be scary, career counselors say voluntary buy-outs are often a hidden blessing.

Workers “immediately operate out of this fear that “I’m going to be destitute,”‘ said Andrea Kay, a career counselor in Cincinnati, and author of “Life’s a Bitch and Then You Change Careers: Nine Steps to Get Out of Your Funk and On to Your Future.”

But “here’s an incredibly wonderful opportunity for you to start a new life and not feel pressured financially, because you’ve got this cushion,” Kay said, noting that some clients have used buyouts to start their own businesses, while others went back to school.

“They’re fearful that “what if I can’t survive financially?”‘ Kay said. “They haven’t figured what they have in savings. They don’t know whether they can live without a paycheck.”

Kay and others recommend meeting with a financial adviser. After doing that, one client realized she could get by on her savings, including the lump sum from her employer, for one year.

“She now has the luxury to explore her next step, because she got this package,” Kay said.

“Most people that I have met who’ve been in this situation, almost all of them have told me, after they’ve gotten through the hard part, this is the best thing that ever happened to me,” Andrea Kay, a career counselor in Cincinnati.

Part of your financial figuring includes assessing how long your lump sum or other savings will last while you seek another job.

A good rule of thumb is that it takes three to seven months to find a new job, said Dale Klamfoth, senior vice president of WJM Associates, a New York-based executive coaching firm.

“It’s difficult to generalize, but they can look at a window of time of three to seven months. If you’re over 50, it does add an extra month,” he said.

Another key consideration: Are you marketable? “Are your skills up-to-date? Is what you do in demand?” Challenger said.

That question points to why GM’s autoworkers might be reluctant to leave their paying jobs. “It’s going to be hard to replace packages that were about $67 an hour when you added in pensions and health-care benefits,” Challenger said.

But, if you choose to stay with the company, consider the possibility of future layoffs, and the long-term health of the company.

In the GM workers’ case, “nobody is going to have job security in a company that continues to operate at multibillion dollar losses,” Ashmore said.

Of course, while the autoworkers are looking at a hefty cash payout, they’re also facing the loss of their retiree health-care benefits (they would retain their vested pension benefits).

That thought is enough to make workers in any industry pause.

“If you thought you would make it to retirement and qualify for a retiree health benefit that would last the rest of your life, that is worth a fortune,” said Ross Eisenbrey, vice president with the Economic Policy Institute, a liberal think-tank in Washington.

A recent Fidelity Investment study found a typical 65-year-old retiring today will need $200,000 to pay for health care in retirement.

Still, it’s a gamble to count on GM paying retiree health benefits years from now.

“Those retiree health benefits are only as good as GM’s continued ability to pay them,” Eisenbrey said. “The odds look very risky.”

Copy the Story Link