Should You Take an Early Retirement Offer?

Are you considering early retirement?

Is your employer putting together an early retirement offer that you’re unsure about?

Want to know if your early retirement offer is worth what you deserve?

An offer of early retirement can sound generous and extremely appealing to an employee who is facing retirement within the next several years. While it can be a great option for some, we have to remember that ultimately an employer’s motivation behind an offer of early retirement tends to be cutting costs and saving money.

So, is early retirement a good option for you? Let’s take a look at some of the considerations you should make when weighing your early retirement offer.

1. Does the offer include medical coverage until you are eligible for Medicare?
With the high cost of medical care these days, make sure you’re considering this expense when you’re looking at the numbers.

2. How does the compensation compare to the amount you would earn as an employee?
Know the precise amount you can expect per year with the offer and compare to the salary you would earn as an employee.

3. Is there a bonus to cover the difference between the offer and the amount you would have earned as an employee?
It’s possible your employer will cover the difference between salary and your retirement offer with a bonus, but make sure you consider any taxes you’d owe on that sum.

4. Is the company experiencing a period of transition?
Think about what’s prompting the offer such as downsizing or merger. 

5. Is the company likely to let you go down the line if you pass on the retirement offer?
If your company is struggling and continues to do so after you pass on an offer, you may end up being terminated without an offer.

6. Will the offer bridge the gap between retirement and when you receive social security?
If your early retirement is several years before social security benefits kick in, compare the offer to your expected benefits and make sure you’ll earn enough to afford retirement.

7. Is there room for negotiation in the offer?
If you think negotiating a better offer is an option, make sure you ask for what you need to be comfortable. But keep in mind that the first offer tends to be the best.

8.  Can your nest egg sustain an early retirement plan?
If the offer falls a little short of what you planned, check the status of your nest egg to see if it can make up the difference.

9.  Are you considering tax or other penalty implications on the offer?
When you’re crunching numbers, don’t leave out any taxes or penalties you are expected to pay on severance, bonuses, and etc.


10. Do you have a high-stress or extremely fulfilling job?
There are costs and benefits to consider that aren’t easily quantified, like the stress or joy you get from your job.

11. Have you discussed the offer with an independent professional in wealth management in Ann Arbor?
Your employer may offer counseling to help you understand your benefits with early retirement, but you should also talk to someone independent from the company so you know your best interest is represented.

Get advice on early retirement from a professional in wealth management in Ann Arbor.

Be confident in your response to an early retirement offer! Discuss all your options and benefits with our team of professionals at Imber Wealth Advisors. We look forward to hearing your story and helping you meet your goals in retirement. Give us a call today.