You’ve worked hard at your job for a long time. You are now closer to retirement than you are to the day you started, but still years of work ahead. Then, out of the blue, you receive a message from HR with an offer to retire… now. Your productivity comes screeching to a halt as you can’t help but fantasize about all the trips you will take and how you will fill your days. Your mind is racing with one all-consuming thought:
Could I… Should I take the Retirement Buyout?
The answer is It Depends. There are many factors to consider and you’ll want to evaluate each before making a decision.
How Attractive is the Retirement Buyout?
Does it make sense to take the package? Does the package amply compensate you for what you would be giving up by not working until your full retirement date?
Is it likely that you will be laid off if you do not take the retirement buyout? If your company is looking to cut costs, retirement buyouts might be the first step on the path to layoffs. It is possible that you will risk getting a less generous severance package if you do not accept the buyout.
With the rising costs of health care, this is very important. Will your health insurance needs be covered until you turn 65 and become eligible for Medicare? Is there a health insurance benefit included in the buyout package? If not:
- How many years do have before you qualify for Medicare?
- Can you afford to bridge that gap?
- Do you have any other options for medical insurance (i.e., through a spouse)?
While most people think they would jump at the chance, this often proves to be the most difficult decision.
- Are you financially ready to retire?
- Are you close to your retirement goals?
- Can you manage your expenses? Is your house paid off?
- Do you want to continue working?
- If so, do you think you can find another job?
- If not, have you given thought to how you will spend your time?
The decision of whether or not to take a retirement buyout can be a complicated one. Part of it is very personal but a large part of it comes down to financial planning. At Zynergy Retirement Planning, we can help!