Demographics indicate that the workforce will age in the years ahead. According to AARP, by 2016, one-third of the U.S. workforce will be age 50 or older, compared with 28% in 2007. However, during these economic tough times, if you're 50 or older you may feel like you're walking around with a "downsize me" sign on your back. In today's corporate environment, cost cutting, restructuring, and downsizing are the norm, and many employers are offering early retirement packages. For workers close to retirement (age 50 and up), often the deal is presented as an opportunity to retire early and start a new "career". The offer is tempting but how do you know if the offer is a good one? Evaluate the package carefully and make sure that the offer will fit your needs. Consider the following:
- Are you being compensated enough for the years you’ve dedicated to the company?
- Are health care benefits a part of the package? (Note the previous week’s blog about the cost of health care.)
- How will early retirement impact your social security and your pension plan (if you have one)?
- Will you be able to afford early retirement?
- Are you ready mentally to handle the spare time and possible loss if identity?
Another consideration to be weighed is that, during these uncertain times, if you stay on a job, you can always quit, but if you were to retire, you may not have the option of finding another job. According to the Bureau of Labor Statistics, the jobless rate for adults age 55 to 64 has more than doubled since November 2007 and in July this year, 7.2 percent of workers age 55 to 64 were out of work. If you are over the age of 50, these are troubling statistics when you are considering finding a new “career”.
However, if you refuse the early retirement package and continue to work, you may do well with your employer. You may earn promotions and salary raises that would boost your pension. You may even receive a second early retirement offer that was better than the first offer. On the other hand, your employer may find ways to let you know that you don't fit in with the company's plans for the future. Your company may demote you, lay you off, or eliminate your position altogether. The advice I’ve read is that it’s best to stay if you can, but if the consequences of your saying are hard to predict, seek professional advice and do it quickly. The average time employers give to make a decision to accept or decline their early retirment offer is 60 to 90 days. While considering the options, keep in mind that personal bankruptcy filings continue to rise as well as the age which people declare bankruptcy. A recent study by AARP found that in 2007 more than 1 in 5 debtors were over the age of 55, compared with 1 in 10 in 1991. The study also found that the rate of personal bankruptcy filings among those ages 45 to 54 had jumped by more than 48% from 1991 to 2007. For those ages 55 to 64, the rate rose by 150%—and for those ages 75 to 84 the rate rose 433%. With statistics such as these, the decision is seems clear.
