AMES, Iowa – In today’s struggling economy, some employers are offering retirement incentive programs to employees as a way to reduce payroll costs and help balance their budgets. Most workers look forward to retirement, but they also assume they will decide when that day will come. Sometimes, however, it’s the employer who suggests now would be a good time for retirement.
If an early retirement offer is optional, workers need to carefully consider whether to accept. If the offer is not optional, workers need to make preparations and work through plans.
Several years ago Iowa State University Extension family resource management specialist Barb Wollan and her colleagues compiled information to help people make informed decisions. “It was another economic downturn in which those who were offered early retirement needed good information to consider the ins and outs of an offer,” said Wollan.
Wollan outlined the major steps to make a decision about an early retirement offer:
Read and listen carefully
Evaluate the options critically.
Wollan emphasized workers should consider their personal goals for retirement before responding to the offer. Is this offer compatible with those plans? She cautioned workers to avoid responding quickly without assessing their individual situations.
Additional topics workers should consider
Is the offer really optional? If you decline, what would your future with the employer be like?
Will you have group health insurance and who will pay the premiums?
Will you need to seek additional employment to fill the income gap?
Do you have options on how to receive the pension payout?
ISU Extension has information on the Web at ‘Early Retirement: Thinking over an offer’ to guide you through early retirement options and related decisions.
ISU Extension publications that explore this topic include Decisions at the Time of Retirement -- Retirement: Secure Your Dreams, Estimating Your Retirement Expenses and more. The publications may be downloaded free or ordered through the extension online store or your county office for a nominal charge.