Early retirement plans can enable you to sprint to the finish line of your career, beginning a life of relaxation or a second career earlier than you originally planned. You'll need to evaluate the plan's offerings carefully to decide whether it's right for you, while weighing the relative risks and benefits of giving up a few years of income.
Possible Age Discrimination
If your employer makes it clear that you're expected to take the package or if you worry that you'll lose your status within your company if you don't take the plan, it could be a form of age discrimination. Under the law, employers can't terminate employees simply because they want to replace them with younger, cheaper labor. Consider whether the plan is really beneficial to you or is a form of illegal age discrimination.
Evaluating the Package
A large sum of money can be a tempting offer, but you must evaluate whether you can live off of the plan's offerings and whether the plan offers fair compensation for loyal service to your employer. Consider asking a financial planner to review the package, and make sure you understand the terms. For example, will you receive monthly payments or a lump sum? Is payment contingent on any specific behavior? What happens if the company goes bankrupt?
Considering Your Finances
Even if the plan is fair, it might not be right for you if you don't have ample savings. Consider whether you can live off of your retirement plan or will need other money. If you won't be able to save for retirement after leaving your job, evaluate whether you already have enough saved or need to continue working for a few more years.
Social Security and Pensions
If you're under a traditional pension, be sure to check the fine print to determine whether the early retirement offer will reduce your pension payout. Similarly, if you haven't yet reached retirement age, you won't be able to draw Social Security, so you'll need to evaluate whether you can live without it for a few years.
Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.