…Your financial situation
While you may end up taking an offer because you’re making the best of a bad situation, you’ll want to consider a number of issues that may arise if you’re not employed. But while you’re taking early retirement from this company, that doesn’t mean you have to retire. You’ll also want to consider how accepting the offer affects your retirement finances such as Social Security.
If working is a lifestyle decision, you’re in an enviable position, but whether working is a choice or not, you’ll still need to assess your financial picture, especially if you’re on the younger side. Chuck Czajka, founder and CEO of Macro Money Concepts in Stuart, Florida cautions that “The younger you are, the more stress will be placed on retirement assets.”
“Do you need to work to pay your bills,” says Tyler. “You may be lucky enough to have earned and saved enough to be financially independent. If you fall into this rare category, congratulations.”
If the offer is generous and you think you’re able to retire, experts recommend that you review your finances thoroughly before making that decision.
You’ll want to ask yourself:
- Do you have enough to live comfortably in retirement?
- Are you old enough to access retirement accounts such as a 401(k) or IRA penalty-free?
- Do you have access to healthcare, and will you be able to afford it?
- What other sources of retirement income do you have available?
- Will taking early retirement have a negative impact on your pension (traditional defined benefit plan)?
- Do you have hobbies or other pursuits that you are passionate about if you retire early and no longer have work to keep you motivated and engaged?
If you retire early, you might be able to get by for a few years until you can access your full retirement funds at age 59 1/2. However, you’ll also want to consider how early retirement affects Social Security, a decision that will impact your monthly benefits for the rest of your life:
- Calculate your benefits to see how much retiring now will affect your payout later.
- Have you already worked enough to claim a sufficient benefit?
- Will you be able to pull through financially until Social Security kicks in?
- Will you opt for an early benefit rather than your full retirement benefit?
While early retirement sounds attractive, you’ll want to keep these questions in mind and consult with a financial planner and/or tax professional, because you may be giving up more than you anticipated – financially and otherwise – when you first decided to retire. …
Read the full article: https://www.bankrate.com/retirement/should-you-accept-early-retirement-offer/