What are the benefits of a voluntary severance package?

For many, a company’s contribution to your family’s health insurance premium is critical to keeping medical insurance and care, affordable. If you are lucky, your voluntary severance package will extend your health benefits. Health insurance will be needed until you are age 65 and become eligible for Medicare.

What do you need to know about severance pay?

Here are five important facts about severance packages that you need to know to maximize the amount of compensation you receive if you are let go from your job. Many employees erroneously believe that a complete severance package, also known as termination pay, consists of one week’s pay for every year of service.

What’s the expiration date on a severance package?

The expiry date on the package can range from one day to one week. The employer will suggest that if the offer isn’t signed back by the deadline, they’ll pull the package and the employee will walk away empty-handed. Your right to pursue termination pay does not expire after a matter of days.

How to evaluate a voluntary separation package or early?

When we help clients answer this question, we commonly use monte carlo analysis. This allows us to simulate different scenarios side-by-side, and quickly see the impact accepting – or declining – an early severance offer will have on your financial plan. Health care has become one of the largest expenses for a retiree, even with good insurance.

What to include in a severance package?

A severance agreement contains the severance pay and benefits that employers elect to offer beyond your last payment, commonly known as the severance package. Every severance package is different. It might include a lump sum payment, a period of continuous paychecks and benefits, or other forms of payment.

What your severance package should include?

Severance packages may also include access to job training, a headhunter or outplacement services, information about filing for unemployment, rollover paperwork for your retirement savings plan or pension, and an agreement to not disparage the company or sue the company, which you must sign to receive your severance pay.

Should you accept a severance package?

No. You do not have to accept your severance package and you do not have to feel pressured into signing a release. You should know that if you do not accept your severance package or sign the release, you are not legally obligated to receive any severance.

What is the standard severance package?

A standard severance package is paid out in a lump sum or over a number of weeks based on the employee’s length of service. For example, a company may one or two week’s pay for each year of service.