Released March 2, 2009
In today’s struggling economy, some employers are offering retirement incentive programs to employees 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 be. 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.
Jean Lown, a professor at Utah State University, said her employer recently offered an early retirement program. The eligible employees needed to make a decision within two months of the announcement.
Iowa State University Extension family resource management specialist Barb Wollan and her colleagues compiled information to help people make informed decisions several years ago. “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
- Gather information
- 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?
Land-grant university extension services across the country have tools and resources including information on the eXtension web site that can help workers make informed decisions about early retirement offers. Start with ‘thinking Over an Early Retirement Offer’ at http://www.extension.org/wiki/Thinking_Over_an_Early_Retirement_Offer.
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Contacts: Barbara Wollan, Iowa State University, (515) 832-9597, bwollan@iastate.edu
Jean Lown, Utah State University, (435) 797-1569, jean.lown@usu.edu
Lynette Spicer, Iowa State University, (515) 294-1327, lspicer@iastate.edu
