Would You Retire for a Buyout?
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 goÃ»t; 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?