Even if you aren't thinking about early retirement, you may be tempted by an early retirement offer. Before taking that offer, however, consider several items:

  • Evaluate personal factors first. Decide whether you are psychologically prepared for and what you will do after retirement. You may decide to work at another job, giving you time to increase your retirement assets while drawing benefits from this job. Find out if you really have a choice. If it is a company-wide offer, you may be able to turn it down without repercussions.

    But if the offer is made to a certain 
    division or a certain group of employees, you may find your job eliminated in a couple of years anyway. Typically, earlier retirement offers are more generous than later offers. So, if you think the company is going to continue to downsize, you might want to take this offer. 

  • Understand what additional benefits are being offered. Usually, for purposes of calculating benefits, these offers add several years of service and/or several years to your actual age. Most offers, however, don't adjust your current salary, which is a significant factor in benefit calculations.

  • Get help in analyzing the offer. You typically need to compare several options that require complex calculations, such as what your retirement benefits would be at normal retirement age versus the current offer, how early retirement will affect your other retirement investments, and how to handle pension distributions. These decisions typically must be made within a short time period and can't be changed later on. 

  • Ask about Social Security supplements.  Since you won't be eligible for Social Security benefits until age 62, find out if the company is offering an annual supplement until that time.

  • Ask if health insurance is being offered.  Medicare coverage is not available until age 65. You don't want to go without coverage, but paying for health insurance yourself can be very expensive. Whether the company will provide health insurance to age 65 can be a significant factor in making your decision. 

  • Negotiate with your company.  Don't assume that the offer is fixed and can't be negotiated. You may know of other employees who received more generous offers. Use that knowledge to increase your offer.

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