Microsoft rolls out first-ever voluntary retirement plan in 50 years
What's the story
Microsoft has announced its first-ever voluntary employee buyout program, a move that will impact nearly 7% of its US workforce. The decision comes as the tech industry continues to adjust to the rapid changes brought on by the artificial intelligence (AI) boom. The one-time retirement scheme is open for US employees at senior director level and below, whose age and years of service add up to 70 or more.
Program specifics
Eligibility criteria for buyout program
The voluntary buyout program is open to US employees at the senior director level and below, provided their age and years of service together total at least 70. However, those on sales incentive plans will not be able to participate in this scheme. The company had 125,000 employees in the US as of June 2025, which means about 8,750 workers could be eligible for this program.
Strategic shifts
Microsoft's strategy to adapt to AI boom
The voluntary buyout program is part of a broader strategy by Microsoft to adjust its workforce amid the ongoing AI boom. The company has been increasing capital expenditure on data centers to provide cloud customers with computing power for generative AI models. This comes as software stocks are being challenged by coding tools from companies like Anthropic, which could potentially disrupt established players in the industry.
Workforce reduction
Microsoft's previous cost-cutting measures
Last year, Microsoft cut costs through multiple rounds of layoffs. The company had 228,000 employees as of June 2025, with 125,000 in the US. Amy Coleman, Microsoft's Chief People Officer, wrote in a memo that "Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support."
Policy revisions
Changes in stock distribution policy
Along with the buyout program, Microsoft is also changing its policy on stock distribution for annual rewards. The company will no longer require managers to tie stock directly to cash bonuses, giving them more flexibility to recognize high performance. Coleman said these changes are aimed at simplifying the review process for managers who now have five pay options instead of nine for employees.