General Motors headquarters in Detroit (Credit: WJBK | myFOXDetroit.com)
SOUTHFIELD, Mich. (WJBK) -
"It's probably a surprise. It was to me, very much a surprise when I got the letter," said GM retiree Bob Black.
He put 40 years into General Motors and now he has only a few weeks to figure out how to divvy up the retirement money owed to him. Black is leaning towards a lump sum. Why?
"Just some of the things I've read and I'm a little bit concerned about inflation, and by getting a lump sum, I'm in complete control of my finances."
It's a question 40,000 GM retirees are having to ask -- the lump sum or not. General Motors took the pension accounts for these retirees and handed them over to Prudential.
"Everybody's just spending the next [several] weeks of their life trying to figure out the most important decision of their life," said Dean Thurmon with Investwise Financial.
He calls it a game of hot potato.
"They decided they didn't want it anymore, so they asked the government ... which means they basically asked themselves since the government is one of the largest shareholders of General Motors, for permission to dump this onto somebody else."
$500,000 is the average amount that a GM employee would get paid out if they went for the lump sum. If not, they get a few thousand dollars every month.
"There was a catch-all for GM called the Pension Benefit Guarantee Corporation that [would] back up the pensions. Prudential doesn't have that. Prudential has the State of Michigan or your own local state that will somehow back up a portion of that pension," Thurmon explained.
250 retirees coming through the InvestWise office with not a lot of time to decide. Thurmon says many retirees have been doing some fuzzy math.
"They're taking their $500,000 lump sum and dividing it by the $36,000 that they're going to receive per year from General Motors and saying, hey, GM is only expecting me to live another 13 years or something. They're not considering any of the interest or growth or dividends ... that $500,000 would be earning for the rest of their life."
It's a hard lesson that guys like Black never imagined having to learn.
"I guess I should have paid better attention in economics class," he said.
GM retirees who are being offered this package have until July 20 to make up their minds.
Tuesday, May 21 2013 6:21 PM EDT2013-05-21 22:21:52 GMT
As people struggle to pick up the pieces in the areas of Oklahoma ravaged by tornadoes, we've learned some relief will be coming from right here in Michigan.
As people struggle to pick up the pieces in the areas of Oklahoma ravaged by tornadoes, we've learned some relief will be coming from right here in Michigan.
Tuesday, June 18 2013 11:08 AM EDT2013-06-18 15:08:18 GMT
Chrysler on Tuesday is expected to file papers explaining its refusal to recall 2.7 million older Jeep SUVs that are at risk of catching fire in rear-end collisions.
In one of the biggest-ever showdowns between an automaker and the government, Chrysler on Tuesday is expected to file papers explaining its refusal to recall 2.7 million older Jeep SUVs that are at risk of catching fire in rear-end collisions.
Monday, June 17 2013 5:55 PM EDT2013-06-17 21:55:56 GMT
A new search for the remains of Jimmy Hoffa is underway in northern Oakland County. Armed with a search warrant, the FBI moved in Monday morning and started digging in Oakland Township.
A new search for the remains of Jimmy Hoffa is underway in northern Oakland County. Armed with a search warrant, the FBI moved in Monday morning and started digging in Oakland Township.
Friday, June 14 2013 10:25 PM EDT2013-06-15 02:25:13 GMT
A team led by a state-appointed emergency manager said Friday that Detroit is defaulting on about $2.5 billion in unsecured debt and is asking creditors to take about 10 cents on the dollar of what the city owes them.
A team led by a state-appointed emergency manager said Friday that Detroit is defaulting on about $2.5 billion in unsecured debt and is asking creditors to take about 10 cents on the dollar of what the city owes them.
Tuesday, June 18 2013 11:38 PM EDT2013-06-19 03:38:44 GMT
After initially defying federal regulators, Chrysler abruptly agreed Tuesday to recall some older-model Jeeps with fuel tanks that could rupture and cause fires in rear-end collisions.
After initially defying federal regulators, Chrysler abruptly agreed Tuesday to recall some older-model Jeeps with fuel tanks that could rupture and cause fires in rear-end collisions.
Tuesday, June 18 2013 11:29 PM EDT2013-06-19 03:29:11 GMT
An angry pastor is trying to keep his cool. He is mad at whoever tore apart his air conditioning unit to steal the copper, but he also says the entire community shares the blame.
An angry pastor is trying to keep his cool. He is mad at whoever tore apart his air conditioning unit to steal the copper, but he also says the entire community shares the blame.
Tuesday, June 18 2013 9:46 PM EDT2013-06-19 01:46:58 GMT
Nearly a hundred years ago, two girls from Detroit put a message in a bottle and threw it into the waters of the St. Clair River. Now that message is back on dry land after being found by a diver in 30 feet of water.
Nearly a hundred years ago, two girls from Detroit put a message in a bottle and threw it into the waters of the St. Clair River. Now that message is back on dry land after being found by a diver in 30 feet of water.
Tuesday, June 18 2013 7:26 PM EDT2013-06-18 23:26:33 GMT
The latest dig in the search for former Teamsters' boss Jimmy Hoffa will resume on Wednesday in an Oakland Township field. So far, crews have found two concrete slabs and animal bones.
The latest dig in the search for former Teamsters' boss Jimmy Hoffa will resume on Wednesday in an Oakland Township field. So far, crews have found two concrete slabs and animal bones.
Tuesday, June 18 2013 4:54 PM EDT2013-06-18 20:54:19 GMT
Who will open for Bon Jovi at Ford Field on July 18? Your vote will decide. 20 bands left in the Fox Rocks contest. Voting period: Now through July 10. Time to 'Fox Rocks' the vote.
Who will open for Bon Jovi at Ford Field on July 18? Your vote will decide. 20 bands left in the Fox Rocks contest. Voting period: Now through July 10. Time to 'Fox Rocks' the vote.
Tuesday, June 18 2013 12:20 PM EDT2013-06-18 16:20:44 GMT
Detroit Metropolitan Airport officials evacuated a section of the McNamara Terminal Tuesday morning after a canine picked up the scent of explosives on the apron, where planes load.
Detroit Metropolitan Airport officials evacuated a section of the McNamara Terminal Tuesday morning after a canine picked up the scent of explosives on the apron, where planes load.
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General Motors headquarters in Detroit (Credit: WJBK | myFOXDetroit.com)
