Susan Tompor: UAW workers look at $60,000 bonus and reasons to retire

Nov. 22--Two weeks had not even passed since UAW members ratified a contract at General Motors. And Sherri Stephens, an investment adviser in Flint, already was scheduled to sit down in early November with a 61-year-old GM hourly worker who wondered if maybe it was time to retire.

The possibility of receiving an extra $60,000 for going out the door is triggering all sorts of similar discussions.

"Really, I'm researching 'Can I go, if I want to go?" said Steven Seybold, 61, who works at GM's Flint Assembly, which builds heavy-duty Chevrolet Silverado and GMC Sierra Crew pickup trucks.

"It's a hard decision to make," Seybold said.

GM hourly workers have up until Dec. 14 to decide if they'll take advantage of retirement incentives in their latest UAW-GM contract, which was ratified on Oct. 25.

What's good for General Motors -- and Ford and, possibly, Fiat Chrysler Automobiles -- may not necessarily be good for everyone who is looking at leaving a steady paycheck -- plus any overtime -- far behind.

For GM hourly workers, the UAW contract includes a $60,000 retirement bonus for up to 2,000 eligible production workers and 60 eligible skilled employees who retire between Dec. 31 and Feb. 28, 2020.

Those with the highest seniority would be approved, if more workers agree to the attrition program than are allocated under the labor agreement. And the plan even includes a tiebreaker.

"In the event two or more employees have the same longest unbroken seniority date, the employee's entire GMIN number in ascending order will be used as the tie breaker," according to the plan for skilled workers.

"I think they're trying to get some older people off the payroll," said Stephens, who is president of the Stephens Wealth Management Group in Flint. A registered investment adviser with Raymond James Financial, she began her own career forty plus years ago as an intern for the practice she now owns.

Yet she warns workers who are considering retirement: "There is no one-size fits all."

Where you are in life matters

"Of course, you know everyone is discussing this at great length," said Bill Barker, who works at the Warren Technical Center.

Barker, 70, will have worked 51 years at GM as of next Feb. 24.

If he works until then. He is eligible to retire on an effective date on or before March 1. He's not quite sure yet what he will do.

Barker, a member of UAW Local 160 in Warren, is carefully studying a seven-page document for a voluntary special attrition program for eligible skilled trades employees.

He is a wood model maker who now works at the training center at the Tech Center offering classes on health and safety issues. It's a UAW local appointed job and it's not physically demanding work, like a job on an assembly line.

"The Tech Center is known for longevity. It's not like a plant, therefore people have a tendency to stay a little longer than normal," Barker said.

Barker, who lives in Clarkston, started out working at a GM factory at 9 Mile and Mound roads in Warren. He worked at one point on the brake assembly line. He worries now that maybe one day, he might face asbestos-related health issues, even though he's in good health. He's wondering about any legal recourse then if he signs the attrition papers now. And he's given the paperwork to his son-in-law, an attorney, to review.

He could keep working. Or not.

"The fact of the matter is I feel pretty good," Barker said.

The fact of the matter is that his wife Patti has a vote too.

"My husband needs to stop working and take me on all those trips he's promised me," she said. "We're 70 so we need to get busy enjoying life."

While the couple has visited London and Paris, she wants to go to China and Vietnam. They've been together 51 years. She retired a year ago -- wanting a year by herself in retirement to get a few things done around the house. Now, she says, it's time for him to retire, too.

"We got up at 4 a.m. every single day for 25 years," she said.

They've been saving for decades.

"Our retirement is going to be good," she said. "It's not like we have to sit home and pinch pennies."

All he has to do is agree and sign the paperwork.

Blue collar workers look at more buyouts

Auto manufacturers are offering retirement incentives to better align their payrolls for the next decade and beyond as the industry shifts toward autonomous vehicles and electric vehicles.

"Automakers across the globe are facing a downturn in vehicle sales for the next few years and many already have announced plans to trim their work forces," said said Michelle Krebs, senior analyst at Autotrader.

"In addition, automakers are preparing for a different future, one of EVs, AVs and new mobility services. That will require a different kind of workers -- yes, likely younger -- with different skills."

During the next few months, thousands of auto workers will be deciding whether the retirement bonuses being offered will be just enough to do the trick.

A more lucrative retirement incentive -- $75,000 or $85,000 -- will be offered to employees at three facilities that GM is closing -- Warren Transmission, Lordstown Assembly and Baltimore Transmission. Some workers in that group who are a few years short of 30 years of service could be looking at some other incentives if they agree to be placed on leave and then retire at 30 years of service.

For Ford hourly workers, the UAW contract -- ratified Nov. 15 -- includes a $60,000 retirement bonus for all eligible production employees and up to 200 skilled trades workers.

Eligible active employees impacted by the closing of Ford's Romeo Engine plant would one day be looking at a special retirement incentive of $75,000 for production workers or $85,000 for skilled employees if they opt to retire.

On Wednesday, Ford said the details of the retirement package are still being worked out so the company could not supply a timeline for when a decision would need to be made or when people would retire. (GM's paperwork said terms of its special attrition program would be presented to all interested employees no later than Oct. 30 -- five days after ratification.)

Ford also noted that Romeo plant's closure, which is part of the deal, is several years away from closing, according Kelli Felker, a Ford spokeswoman.

Given the pattern, it's expected that Fiat Chrysler Automobiles NV would have some type of retirement incentive for hourly workers once a contract agreement is reached.

While some Fiat Chrysler hourly workers have their eye on retirement, they want to see what the contract has to offer, if anything, before making any moves.

Several considerations, of course, come into play as workers evaluate whether now is indeed the best time to retire.

Such as: How much money you need to live on now? What kind of debt are you juggling already, including any college loans you may have outstanding for your children? And how's your health and expected healthcare costs?

"Don't jump off the diving board without having any idea where you're headed," Stephens said.

Get answers to some of these questions:

How far can $60,000 really take you?

For starters, the $60,000 is subject to federal, state and local taxes, as well as FICA taxes for Social Security and Medicare.

As a result, the amount you'd have to work with could be closer to around $42,000 or so after taxes, according to Leon LaBrecque, chief growth officer at Sequoia Financial Group in Troy.

In general, LaBrecque said, a potential retiree can consider taking a third of that money to pay off debt, a third to save and invest and the rest to dedicate toward some form of enjoyment in retirement, such as trips or special home remodeling projects.

The payout can help make up some of the difference, too, between what you'd take home in your bottom line in a pension vs. a regular paycheck, he said.

How are you handling your money now?

If you're impulsive -- ready to drop everything to head to Hawaii next week -- you could risk running out of retirement savings sooner than you might expect.

If you've got a lot of money invested in stocks, you could have more at risk than you realize, too. Could you afford to ride out the next downturn on Wall Street?

"The market is at an all-time high," Stephens said. "And the next thing you know, the market is down and a third of your 401(k) is gone."

Do you have a retirement game plan?

"Decisions in these first few years of retirement will have long lasting effects over the next 30 years of your life," said Sam G. Huszczo, a chartered financial analyst in Southfield.

A six-figure lump sum, even after taxes, is a large amount of money. But "the sustainable income that it could generate is likely much less than one realizes," he said.

"If this bonus has lured you into retirement and not just the next job, you have to quickly get yourself mentally ready for life on a fixed budget."

If the bonus helps you retire from working, it will be even more important to have an emergency reserve if you're giving up a consistent paycheck.

How will you deal with the health care?

On the plus side, currently UAW retirees at GM, Ford and Fiat Chrysler face relatively modest health care costs compared to what other retirees might face, according to area financial planners.

Monthly contributions now are $34 per family for retirees in a traditional care network, according to LaBrecque. The deductible is $675 a family.

Stephens called the out-of-pocket costs for UAW retirees manageable unlike the costs faced by salaried retirees or others at different companies.

But she warned that when it comes to health care, retirees need to realize that such low costs aren't guaranteed indefinitely.

"As we know, promises can sometimes change," she said.

It's best to be prepared for other possibilities.

What's the right move for you?

Where you work -- and what you're doing -- could influence your decision.

For some GM hourly workers, the 40-day strike at GM shed more light on the question of what it could be like to have a lot of free time.

Seybold, 61, said he winterized the boat and got the snowmobiles ready, worked in the basement but still wasn't all that busy during the strike, not like working seven days a week now at the Flint truck plant as a torque monitor.

Seybold has worked at GM for 42 years, living in Davison his entire life.

He and his wife want to travel in retirement but she's not ready at age 59 to leave her job as a waitress.

While the couple has built up retirement savings in the 401(k) and he has a GM pension, they still want to help their two children who are in college. They even co-signed some student loans.

His daughter is on her way to earning a degree in chemical engineering from Michigan State University in 2021. But the cost is more than $20,000 a year.

"College is so expensive -- and things happen all the time," Seybold said.

And then there's that nagging issue of what would Seybold do while his wife continues to work?

"What are you going to do with your time?" Seybold asked. "You can only hunt and fish so much."

After sitting down with his financial planner, he said the numbers show that he could retire. But he's thinking he could be better off by working at GM a few more years.

Yes, he'd walk away from $60,000 before taxes as a retirement incentive. But he expects he could make $100,000 or more next year anyway since the plant is working plenty of overtime.

GM wants to catch up after the strike when it comes to building the new 2020 Silverado. He said the plant is likely to run on the Friday after Thanksgiving and the Saturday and Sunday, too.

As of last week, Seybold wasn't sure if he'd volunteer to work Thanksgiving weekend. He was hoping that the Davison High School football team would beat Sterling Heights Stevenson on Saturday Nov. 23 and then end up playing at Ford Field on Nov. 30.

He speaks with almost as much enthusiasm for that local football team as he does for the 2020 Silverado.

"You're building a whole new truck," he said. "It's just a wonderful truck."

Seybold said he is thankful for being selected to work with the torque group for the launch of the new truck and "very proud to be part of something that big."

"Safety is one of the most important things in building a truck so we take great attention to detail," he said.

And Seybold expects there's a good shot right now that he'll keep doing his part in the next few years to build the heavy-duty trucks that GM is making in Flint.

"Hopefully, they'll sell a million of these," Seybold said.

Contact Susan Tompor at 313-222-8876 or [email protected]. Follow her on Twitter @tompor. Read more on business and sign up for our business newsletter.

___

(c)2019 the Detroit Free Press

Visit the Detroit Free Press at www.freep.com

Distributed by Tribune Content Agency, LLC.