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Should you accept an early retirement offer?

On Behalf of | Oct 30, 2019 | Firm News |

It is not uncommon for New York employers to use early retirement offers to encourage older employees to leave their jobs early and voluntarily. Some use these offers to reduce their staff or to get someone more qualified into the position. If your employer offers to buy you out, you may wonder if accepting is a good idea. The answer really depends on a number of factors, which Investopedia explores in depth. 

One of the foremost factors you should consider before accepting an early retirement offer is severance pay. Though there are no state or federal laws that dictate just how much in severance pay employers must pay early retirees, it is standard for employees to receive one to two weeks’ pay for every year of service to the company. Senior managers and executives may receive higher offers. Some employers may extend the years of service in order to make the offer more attractive. 

With the rising cost of health insurance, more employers are unwilling to offer health insurance as an incentive for early retirement. However, on the opposite end of the spectrum, it has become an effective way to encourage older employees to accept these deals. If your employer offers health benefits — whether up until you turn 65, supplemental coverage after your 65th birthday, 18 months of continuous coverage post-retirement or to cover the cost of your employee health insurance plan — it may be worth your while to consider the offer seriously. 

Before you accept any offer, however, ask your employer what is to become of your retirement assets. What will happen to your pension plan, retirement plan or stock plan? Request a copy of the proposed agreement and bring them to your attorney to have him or her review it in depth.