If youre counting down the days to retirement, an early retirement offer can feel tempting.
You cant wait to relax and enjoy life after a lifetime of working, so why not jump in?
Actually, early retirement packages arent the best idea for everyone.
That way, you could check that its the best choice for you.
Heres what you oughta know about early retirement packages.
What Are Early Retirement Packages?
Also known as a buyout, an early retirement offer typically comes up when a company faces budget issues.
In exchange forretiring early, the company will offer a severance package.
It helps offset the loss of income that early retirement will bring.
For many retirees, though, Social Security income wont kick in until at least age 62.
Even then, your monthly checkwill be lowerthan if you waited until full retirement age.
For example, lets say youre 57 and need to cover living expenses for eight years.
That means youll have to dip into your retirement savings.
Keep in mind that even if you qualify forpenalty-free retirement plan withdrawals, youre pulling from that account early.
Youll need to do some careful budgeting to stretch out the funds.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Investing the funds can ensure any money you get from your buyout will grow during retirement.
Could you put that money into something that grows over time, like stocks or real estate?
Health Care Considerations
One often-forgotten part of early retirement is health care.
One unexpected surgery or long-term illness can take a toll on your retirement savings.
Reviewing the Offer
Employers usually leave a little wiggle room for negotiating.
See if they can make a few adjustments happen.
The negotiated offer could make the difference between accepting it or turning it down.
When negotiating, emphasize your contributions to the company and express a willingness to be flexible, Meyer recommends.
Most employers will offer a reasonable deadline for a response.
Early retirement packages may help businesses avoidlayoffs.
However, they arent always the best choice for the employees considering them.
Its important to gather all the information and carefully review it before making a big decision like early retirement.
Stephanie Faris is a professional finance writer with more than a decade of experience.
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