Q: I recently received an early retirement offer from my company. What should I consider before taking early retirement?
A: It may seem like you've been handed a golden ticket to retire early, but have you thought about whether you can afford it?
If you are younger than 65, you'll need to consider the high cost of health insurance until you qualify for Medicare. Do you still have a mortgage and other debt? Think about the impact that losing your employer-provided life insurance will have if you die beforeyour spouse.
Perhaps you are planning to collect Social Security early to supplement your income. Consider that your benefits will be permanently cut by 8 percent per year for each year you collect before full retirement.
If you have a pension, what impact will the early retirement have on your benefits? If you have a traditional pension plan, the benefits you receive are based on your age and years of service. Is your employer offering to increase your years of service?
If your employer is continuing your health insurance coverage, will this benefit continue if you take a lump-sum pension? Sometimes coverage is tied to receiving a monthly pension payment.
