Has COVID-19 Forced You Into an Early Retirement?

Has COVID-19 Forced You Into an Early Retirement?

Dave Abate, CFP®, Senior Wealth Advisor

Recently, companies like Delta and Ford have introduced buyout programs to help lower labor expenses amid the COVID-19 pandemic. If you’re on the receiving end of this offer and close to retirement age, it hits differently.

Should you take the money and run? Here’s how to evaluate your financial plan in the event of an earlier-than-expected retirement.

1. 1. Crunch the numbers: It sounds simple, but this is the best way to determine you won’t outlive your money. The last thing you want to do is accept your forced retirement without knowing where you stand financially. We’ve seen situations where people were required to return to work with fewer options than before after realizing they couldn’t afford to retire.

1. 1. Engage a professional: Working with a qualified professional adds a layer of assurance to your decision. We frequently help clients build a cash flow-based plan that offers clear insight into the probability of reaching your goals and objectives. In fact, our software runs 1,000 separate trials to arrive at a probability score out of 100%, providing you peace of mind that your money will be there when you need it regardless of what life throws at you. Furthermore, your advisor can help analyze other critical details of your financial picture, including reviewing tax impacts, coordinating Social Security benefits, evaluating healthcare costs and adjusting lifestyle expenses.

1. Consider how you will fill the gaps: If after meeting with a professional you determine there will be a shortfall in income, consider how you will fill those gaps. What makes the most sense for you, personally? Are you in a position where you need to find other employment, either part time or full time? Do you have a passion or hobby that could be turned into a side hustle? Or should you reduce your lifestyle expenses? While a professional can guide this process, only you know which levers you’re willing and able to pull to make it work.

So, is the buyout an offer you can’t refuse? Given our current economic situation, we could be seeing more companies extend these packages. It’s imperative you first crunch the numbers to determine if it’s an ideal solution based on your situation. More importantly, if you don’t already have a financial plan, this is a good reminder to get started. Knowledge is power, and power provides flexibility and peace of mind.

For more information on evaluating an early retirement, check out my recent contributions to The Wall Street Journal or give me a call at 216.800.9000.