Provided by Pam Prine

The pandemic has hastened the retirement of some baby boomers, and the linked furloughs and layoffs in many industries have led others to wonder if a retirement transition might come sooner than they think. Buyouts became common last year as businesses cut costs. What if you receive one this year? 

The first thing to remember is that you don’t have to retire when you are offered an early retirement package. If you can keep working for another employer after receiving severance pay, extended health benefits, or a pension from your old one, you might end up better positioned for retirement on your schedule and terms.

A buyout offered before you are eligible for Medicare can be problematic, as the Consolidated Omnibus Budget Reconciliation Act (COBRA) only lets you keep your employer’s health coverage for up to 18 months (if you are married, you could try to enroll in the health plan at your spouse’s workplace, as a workaround).

Remember also that a sizable severance package, while wonderful to receive, also represents taxable income; you might want to ask your employer if they can distribute that money to you over multiple years, which could lower the risk of the payout taking you into a higher tax bracket.

Any buyout offer, at any age, should be carefully considered not only in view of the retirement savings you have amassed but also in view of your current and possible future income sources.1

Pam Prine may be reached at (623) 299-9710 or pam@keystonegroupaz.com www.keystonegroupaz.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through J.W. Cole Financial, Inc,. Member FINRA/SIPC. Advisory services through J.W. Cole Advisors, Inc. (“JWCA”). Keystone Capital Management Group, LLC and JWC/JWCA are unaffiliated entities.   

Citations.

1. AARP, August 28, 2020

Leave a Comment