Can You Afford A Buyout?
Updated: Feb 12, 2021
10,000 employees are now leaving Verizon. Verizon decided to offer a buyout to employees at their company and 10,000 employees accepted their offer. Buyouts usually happen when companies need to restructure in order to save money. Buyouts are better than layoffs because in a buyout they give you money. In a layoff you just get fired and you have to figure out where future money is going to come from.
Buyouts can be great if you are ready for them. Verizon is paying up to 50 weeks pay for some employees. "Up to" means that some people are getting less than that and most of the time the only people getting that many weeks are the ones who have been there a couple of decades. Those people may end up walking away with $60,000.
But, what about everyone else?
There are some people leaving Verizon with $8,000, $15,000, maybe $22,000 and you are probably thinking to yourself "I'll take that!"
I'm sure you would, but could you really afford a buyout?
Although these employees are getting thousands of dollars they still could be in trouble financially. They still have financial obligations to take care of and now they don't have a regular paycheck coming in. So an employee with a $1500 mortgage will go through that $8000 buyout in five months and that is if the mortgage was the only bill which we know it is not.
Not having an ICYABF (in case you are breathing fund) when a buyout or layoff happens will have you in a bad place financially within a couple of months. When you have six months to a year of expenses saved then you can afford to have a company say "we no longer need your services." An ICYABF is the cushion that softens the blow that Verizon gave to these employees.
If these 10,000 employees have an ICYABF they are going to be able to have patience in a job search. Some of them are even going to be able to take the buyout money and start a new business because they have a year's worth of savings in addition to the money Verizon gave them.
The point of all of this is that if you work for someone else it means that at any time you can be let go. Since that is the reality it is important that you get your finances to a point that you can afford a buyout or layoff. If your ICYABF is not at that point then it is time to start moving more money into it so that you are prepared for anything.
If you think you can't be released or replaced by the company you work for, think again. The next couple of years are going to test that theory here in the United States.
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