NOVI, Mich. -- For weeks, John and Kathy Matthews have agonized over the choice: Accept $818,000 in a lump sum from General Motors to buy out John Matthews' pension or keep collecting a check of $4,854 a month.
They have consulted nearly a dozen financial advisers, spent countless hours on the Internet, discussed scores of possible outcomes, and lost a ton of sleep. And with the deadline to decide today, they were still trying to decide what to do.
"It's not an easy decision because we don't know how long we're going to live," said John Matthews, 63, at their airy condominium in this suburb west of Detroit.
GM has made similar offers to about 42,000 of its 118,000 former white-collar employees and surviving spouses. Those who decide to keep the monthly check will be switched to an annuity provided by Prudential Insurance. Those who take the lump sum will be saying good-bye to GM's financial embrace forever.
GM said the change would eliminate $26 billion of its $134 billion in worldwide pension obligations. The automaker's global pension plan is underfunded by about $25 billion, which has been a cloud over the company's finances.
Some said the pension change was a cultural shift for an automaker whose hefty pay and benefits earned it the nickname Generous Motors.
"Those were the old days," said David Cole, president emeritus of the Center for Automotive Research in Ann Arbor, whose father was a top GM executive "Everybody is trying to run leaner now, and GM is not unique."
Ford Motor Co. said it would make its own buyout offer to its 98,000 retired salaried workers later this summer. And GM has said it might discuss pension buyouts for its 400,000 hourly retirees and surviving spouses with their union, the United Auto Workers. Chrysler, however, has said it has no plans to offer buyouts.
For the auto companies, the financial impact is largely the same, whatever each retiree decides. The lump sums are calculated using a formula from the federal government that takes into account each retiree's monthly pension and life expectancy.
But for the retirees, the choice has prompted deep, often uncomfortable, consideration of both their personal finances and their own mortality.
"I've got members who get two hours sleep, are crabby, and being treated for ulcers," Wayne Williamson, treasurer and secretary for the GM Retirees Association, said recently. "And it's not just the annuity, but the short length of time they have to make a lifetime decision."
Mr. Matthews, a former engineering manager at the Technical Center in Warren, Mich., who retired in 2008 after 41 years, meets weekly at a diner with a coterie of retired colleagues, and the pension choice has dominated recent conversation.
Mr. Matthews said most of his friends were leaning toward the monthly checks. But for him, the calculation was not so simple.
Although GM won't put it quite so directly, by Mr. Matthews' math, the company predicted that he would live for another 21 years and used that estimate to come up with the $818,000 offer.
In addition to his pension check, Mr. Matthews receives Social Security, and he also has an individual retirement account. Kathy Matthews, 62, works part-time at a hospital as a registered nurse, and has a home-based business selling nutritional products. When she retires at 66, she will not receive a pension.
The couple has no mortgage or car payments, although both of them have had surgery in the last year, incurring $6,000 in out-of-pocket costs.
They figured that if they earned a return of more than 4 percent a year from investing the lump sum, they would do better than the monthly pension check.
The bigger worry for them was their estate. Whereas funds from a lump sum could be left to their three children and two grandchildren, pensions cannot be inherited.
Jim Shepherd, president of the retiree association, said some members were taking the pension changes personally. "People are saying they feel like GM is divorcing them," he said.
Mr. Shepherd, who had been a GM fleet account executive in Northern California, said the average lump sum offer was about $500,000. He said he could not predict which option most members would choose, although he had decided to stick with his monthly check of about $4,000.
Dave Roman, a GM spokesman, declined to discuss how many people had already decided or what the tally for each option was so far.