Early Retirement Offers – The Why & When

Zac Majors

Posted on 11/02/2020

by Zac Majors

Early Retirement Offers – The Why & When

The COVID-19 pandemic has left many a company in shambles; and chances are that with a second wave incoming, things may get worse before they get better. Management teams are looking for ways to cut costs, and one major way of doing that is by reducing or restructuring their companies.

Employees are either given extended sojourns or early retirement options to encourage them to leave voluntarily. Here, we’ll discuss these early retirement plans and whether (or when) you should accept such offers.

What Is an Early Retirement Offer?

Although offers vary from employer to employer (and even from employee to employee), early retirement packages usually include severance payments, insurance coverage, retirement assets and more to incentivize employees to leave on their own.  

Having said that, not every early retirement offer is as judicious, which is why you may need to consider how it will impact your financial planning in detail.

Here are some constituents that early retirement offers.

Severance Payments

Severance is a custom, not a compulsion. Some companies offer employees one or two weeks, or even a month’s salary as severance against the number of years you have worked in a given company. To sweeten the deal, employers often award additional service years to enlarge the payout.

Some employers have been known to offer salary continuation to upper-level management that continue until a certain age limit has been reached. This can be in lieu of or in addition to severance payments.

Insurance Coverage

Although not many companies offer medical coverage to their retirees, this is the ultimate bit of sugar employers have started to add in early retirement offers for a fixed number of years – or until Medicare kicks in.

It is common practice to offer life and disability-income insurance as well for employees with special needs.

Retirement Assets

These are assets a company offers to employees retiring. This could be a company car, shares or more to incentivize you into taking the deal.

There are other perks as well that a company may add in retirement offers, such as outplacement services, guarantees, or more. The offers may be negotiable, but often it is best not to negotiate because as we mentioned, there is no law requiring a company to increase the early retirement offer. The next option is a layoff.

If you’re going to negotiate, you can do so by dropping something of the deal out and asking for another.

If you refuse to take early retirement, you may be able to continue working and even thrive, but you might not be that lucky, either. Before rejecting an offer, make sure your position can’t be eliminated in the near future.

It is hard to predict what will happen if you accept or refuse an offer, so make sure you consider all ends. If you’d like help considering whether accepting  your early retirement offer is a good idea or not, we recommend you get in touch with Centric advisors or drop us an email!

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