Receiving an Early Out Package Close to Retirement - What Do You Consider?
What do you do if you are given the opportunity to take an early out package, and you are close to retirement? This type of thing is happening a lot these days, and you need to know what to consider. Early retirement does sound appealing. However, it is not always the right decision, especially when you are close to retirement. After evaluating the offer, here are the questions you need to consider.
What about health insurance?
You just have to make it to age 65 for medicare to cover you. Do you have a gap between cobra and age 65? You have to know that there are no good options when it comes to traditional health insurance. In most cases, it is an expensive HMO. The Christian expense sharing network, Medi-Share, is a good option for those with no pre-existing conditions. That is an option available to a small percentage of people.
How much cash do you have on hand?
Do you have an adequate emergency fund? Do you need additional years to build that account up?
Do you still have debt?
You want to be as close to being debt-free as possible at retirement. Would the additional years of working allow you to get debt free?
Do you have sufficient cash-flow to get you to the point that you can claim social security benefits?
The decision to claim social security benefits is a 20 to a 25-year decision. You don't want to claim early unless it completely makes sense. Claiming too early could jeopardize you for the long-term. Do you have enough cash flow to get to social security benefits? At this point, cash flow could come from a pension pay-out, investments, any annuities, and or cash on hand.
Would you just get by if you retired early?
Retiring early and just getting by is a tough way to retire. In that situation, the early retiree does not have sufficient money to absorb the unexpected.
Are there potential other employment opportunities? A part-time job could make that early retirement package work. Explore the possibilities and make sure you have something lined up before you accept the package.
As you can see, there are many things to take into consideration. It is an enormous decision and one you have to get right!
If you are facing this decision, you are welcome to set up a quick call to go over your options at no cost. You can email Heather at Heather@prudentmoney.com to set something up.