Have you or someone you know recently received a lump sum/cash offer by an employer to retire or otherwise leave employment early?
A lump sum sounds enticing, but with all factors considered, it isn’t always a great deal. While the decision to take an early-out incentive is personal, consider the following:
1)How will your health insurance be affected?
2)If you have a pension, what will retiring early cost you in lifetime pension benefits? What about Social Security?
3)How close are you to a pay raise?
4)Do you have enough saved?
5)What happens if you don’t accept the offer?
6)How quickly can you find another job?
7)How will this affect your taxes?
8)How’s your health and well-being?
If you aren’t ready to fully retire, try negotiating for a reduced schedule. Employers are open to a transition plan, especially if you are willing to train your replacement. You could also hold out to see if they’ll sweeten the deal.
Don’t let a lump sum be the reason you retire. But if you were going to leave anyway, carefully weigh your options with your team of trusted professionals.
It really depends on the person. For some people, a lump sum to retire might work out well. For others, not so much. Great post!
You’re right Jenny; it’s a personal decision. That’s why it’s important for the person to take a step back and not let the smaller incentive upfront be the only factor. Thanks for your comment!
I wouldn’t accept any sum of cash until I had time to process things. I would make sure I saved enough or that I could do something else to grow my income (because I don’t want to just stop working). Having more free time means I could travel with my family which is amazing when you have the budget for it. I try to plan ahead so there’s money available for each of the important things.
I would definitely not accept their first offer. Would try to hold out because from what I’ve heard the initial offer is not nearly as good. If I worked for 30-40 years in a field or for a company, I expect that work to be appreciated and paid accordingly. I want to be respected for my devotion.