When Is Voluntary Retirement

a Good Fiancial Decision?

Every time a company suffers from an economic recession or falls into financial trouble, usually its workforce experiences the consequences first. In an effort to reduce costs and keep business afloat, many company executives offer hundreds of thousands of dollars in early voluntary retirement to many of its employees. This might seem like the right measure for the company, but is it a good deal for you? That depends on several factors.

Even if your company’s offer seems the most appropriate for your particular situation, here are several suggestions to help you make a better financial decision:

1. Make sure to meet with a financial advisor who may uncover hidden monetary implications and help you see other available options.

2. Employees over 50 years old are the first to receive a voluntary retirement option. Even though you may feel close to retirement and think the generous package will nicely cover those extra years, consider possible health related issues within your family. Does the package come with health insurance? Is it going to cover your whole family, and for how long? If not, do a little research to find out if affordable health insurance is available in your state. Medical bills can make your retirement money go quick.

3. If you are under a pension plan, ask your supervisor whether you will receive periodic payments or a lump sum, and how long you have to wait.

4. If you are the main financial support for your family, take into account any important expenses you might incur if you have kids heading for college, an outstanding house mortgage, car payments, and other current or future debts you might have to take.

5. If you are going to receive the retirement package in a lump sum or regular payments, ask your financial advisor how taxes will affect you.

6. Usually, employees have between one and two months to think about a company buyout. During this time, you might want to look for another job or get a feeling for the job market. If you want to work within your area of expertise, make sure that under your company agreement you will be able to work for their competitors if that is the case. If not, how long you will have to wait. It is possible that you will find only jobs for which you are overqualified; is your age going to be a factor in those available jobs? Are you going to need more training? If you have to relocate, how much it is going to cost?

It is important to evaluate all possible benefits and risks involved. If you decide to keep your job, for example, you might be laid off later without the buyout if your company is not able to recover financially or is sold. However, considering all possible options and factors will increase the odds in your favor. Either way you decide, remember that it is not always easy to make the right decision. After all, job and financial security are rare commodities to come by.

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