Milton Beach began working at General Motors as a janitor in 1974. Over the years he moved up, serving as a production supervisor in a parts plant and eventually rising up through the company’s media relations department. He stayed even after GM spun off his division in 1999 to become the independent Delphi Corp. That’s because Beach, who retired earlier this year, knew that remaining loyal to the company was important: He wanted to keep his benefits because they were the best in the business.

Or so he thought. In February, a judge ruled that Delphi could stop providing health or life insurance benefits to 15,000 salaried retirees, including Beach, as of April 1.

Delphi entered bankruptcy in 2005, and the move is one of many cost-cutting measures the company is counting on in its attempt to return to profitability. But it’s leaving retirees like Beach in a pinch. Purchasing the health and life insurance benefits that retirees expected Delphi to pick up will cost $1,300 a month on average—or half the typical retiree’s pension—according to the Delphi Salaried Retirees Association.

“It’s having a traumatic impact,” says Beach, 55, of Kokomo, Ind. “Everybody’s living on a fixed income.”

The retirees had filed an objection to the plan, but the court sided with Delphi, saying that bankruptcy laws allow companies to terminate retiree benefits. The retirees say they will appeal.

Beach says that throughout their employment he and other retirees received annual benefits summaries from the company that amounted to a guarantee of benefits. But Delphi representatives say there were always notations indicating that there was no guarantee.

While the company did not anticipate cutting retiree benefits when it entered bankruptcy in 2005, changes in the economic climate and the automotive industry in particular leave the company with few options, according to Delphi spokesman Ron Beeber. The benefits total about $7 million a month and represent a $1.1 billion liability over time.

“It’s not something we wanted to do,” Beeber says. “But we really feel that the changes are necessary to come out of bankruptcy.”

Michelle Diament is a writer in Memphis, Tenn.