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 11:31 AM EDT2013-05-21 15:31:20 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, May 21 2013 9:50 AM EDT2013-05-21 13:50:04 GMT
Find out how you can help the victims of Monday's deadly tornado that ripped through the Oklahoma City suburbs, killing dozens and flattening neighborhoods, schools and businesses.
Find out how you can help the victims of Monday's deadly tornado that ripped through the Oklahoma City suburbs, killing dozens and flattening neighborhoods, schools and businesses.
Thursday, May 16 2013 1:05 PM EDT2013-05-16 17:05:51 GMT
Detroit ditto heads rejoice. Your leader is interested in news in Detroit, at least enough to qualify a report on a large Powerball jackpot as more proof that 'low-information outreach' is working.
Detroit ditto heads rejoice. Your leader is interested in news in Detroit, at least enough to qualify a report on a large Powerball jackpot as more proof that 'low-information outreach' is working.
Tuesday, May 21 2013 12:01 PM EDT2013-05-21 16:01:58 GMT
The American Red Cross is working in a variety of ways and from several different areas of the country to help the victims of the tornadoes which struck in the nation's heartland.
The American Red Cross is working in a variety of ways and from several different areas of the country to help the victims of the tornadoes which struck in the nation's heartland.
Tuesday, May 21 2013 11:48 AM EDT2013-05-21 15:48:16 GMT
Weather Authority Ben Bailey says the humidity has dropped since earlier this morning but the risk of severe weather still exists Tuesday throughout southeast Michigan.
Weather Authority Ben Bailey says the humidity has dropped since earlier this morning but the risk of severe weather still exists Tuesday throughout southeast Michigan.
Tuesday, May 21 2013 11:31 AM EDT2013-05-21 15:31:20 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, May 21 2013 9:50 AM EDT2013-05-21 13:50:04 GMT
Find out how you can help the victims of Monday's deadly tornado that ripped through the Oklahoma City suburbs, killing dozens and flattening neighborhoods, schools and businesses.
Find out how you can help the victims of Monday's deadly tornado that ripped through the Oklahoma City suburbs, killing dozens and flattening neighborhoods, schools and businesses.
Tuesday, May 21 2013 7:43 AM EDT2013-05-21 11:43:15 GMT
Gustav Nyquist and Drew Miller scored 31 seconds apart midway through a previously scoreless game, helping the Red Wings beat the Blackhawks 3-1 on Monday night for a 2-1 series lead.
Gustav Nyquist and Drew Miller scored 31 seconds apart midway through a previously scoreless game, helping the Red Wings beat the Blackhawks 3-1 on Monday night for a 2-1 series lead.
Tuesday, May 21 2013 7:35 AM EDT2013-05-21 11:35:00 GMT
Police say a 55-year-old woman is dead and two men are wounded following a shooting at a vacant Detroit residence believed to have been used for drug activity.
Police say a 55-year-old woman is dead and two men are wounded following a shooting at a vacant Detroit residence believed to have been used for drug activity.
Tuesday, May 21 2013 7:23 AM EDT2013-05-21 11:23:29 GMT
Basehunters, a storm chasing team from Norman, Okla., captured over three minutes worth of video showing Monday's deadly monster tornado that roared through the Oklahoma City suburbs.
Basehunters, a storm chasing team from Norman, Okla., captured over three minutes worth of video showing Monday's deadly monster tornado that roared through the Oklahoma City suburbs.
General Motors headquarters in Detroit (Credit: WJBK | myFOXDetroit.com)
