Photo: chispita_666 The College of Liberal Arts at UT is offering its first ever “buyout.” If a faculty member retires at the end of this semester, s/he receives two years of pay as a lump sum. To be eligible, the sum of age plus years at UT must be at least 93. Of the 88 eligibles, I’m told that over 40 are taking the buyout.
It’s an interesting economic calculation. An easy comparison is the current monetary gain to the lost future earnings (assuming the professor would not be reemployed elsewhere, or at least not at the same pay). The tougher comparison is the likely gain or loss to the utility of the extra leisure — or perhaps the disutility of possibly never teaching again.
I would predict that older people would be more likely to take the buy-out — since the present value of their lost earnings is lower; but the oldest eligible person is 84, and he isn’t taking it because he loves teaching and gets little enjoyment out of his leisure. Chacun a son goût; but if I were eligible (despite being age 67, my mere 18 years at UT renders me ineligible), I would take the buyout in a minute. What would you do? Why?
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I would take it, and then use those two years pay to spend two years (or more if I stretch it out) doing something worthwhile.
If this is early on in my life, that would probably involve taking further education, and then returning to the workforce with an even greater value.
If this is later on, I’d probably write a book or look into getting some sort of indie project going. Maybe try my hand at producing an ultra-low budget movie or game.
Unless health and dental benefits were included, I would not take it, unless I really hated teaching or I had something better to do. Presumably anyone who has reached the magic number still likes their job. Also, if they have been teaching long enough, their seniority probably assures them of the best (and most convenient) time slots, so the physical problems would not be too bad. Finally, they probably have tenure, which means not only could they not get fired for not doing research, etc., but they are eligible for at least a semester off every 7 years or so.
There are 88 people who have (age + UT time) of 93 or more just in the UT College of Liberal Arts? Out of how many, I wonder.
This is not unusual. Buyouts like this go back at least 30 years in the corporate world. My father took a buyout and then went to work for another company for another decade before finally retiring. I’ve known at least a couple of dozen others that have taken buyouts in one form or another over the years. They almost always go to work somewhere else.
What is their marginal product and what is their value on the open market if they take the buyout and consult or find some other way to sell their accumulated human capital?
If you’re close to being ready to retire anyway, or have a back-up plan for employment, it would foolish to turn down free money.
The question as put is unanswerable. Someone with no money in the bank would likely reach a different answer to someone with a fat portfolio of patents and lots of money put aside.
Take it, and immediately start looking for a job elsewhere. Putting two years’ pay in the bank and getting one pension while simultaneously earning another paycheck is a winner.
I had a teacher in high school, he was a retired USAF colonel (Pension #1), had taught at one school long enough to get another pension (not sure if it was full or partial) and was teaching at our school long enough to qualify for at least a partial pension. That’s a pretty smart move if you ask me.
J.Ja