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Questions to ask if you are offered the "Golden Boot"

By personal finance columnist and author Jane Bryant Quinn:

"Not all retirees have a choice. You may arrive at work one morning to learn that your company has opened an early-retirement window for everyone 50 and up. Typically, you have 30 to 90 days to jump (or be politely shoved). If you leave, you’ll get bonuses not normally available. Should you take the offer?

"As you sit at your desk, with your heart beating a little faster, ask yourself the following three questions:

"Question One: Do I really want to retire (or at least leave this job)?

"If the answer is yes, see a fee-only financial planner and work out the arithmetic. This window may fit perfectly with your plans.

"If the answer is no…

"Question Two: What happens if I stay?

"In the bosses’ minds, all employees are divided into 'greenwood' and 'deadwood.' Some they want to keep and grow; others they want to chop away. But they can’t walk down the hall saying, 'You, you, and you, retire early!' without running afoul of the age discrimination laws. So it’s up to you to guess their intent.

"Take it for granted that deals have been offered indirectly to particular employees ('Congratulations, you’re due for a double bonus next year and a vice presidency will be opening up'). If nothing like that has come your way, drop by your boss’s office for a chat. What’s the future of your department? Is your job subject to reorganization? What’s your next promotion? Is your boss going to stay or go?

"If the vibes say 'stay,' you might want to chance it. Someone has to keep the shop open. If the vibes say 'go,' don’t hesitate.* You might lose your job anyway, and without a good-bye bonus. To collect your bonus, you may have to sign an agreement not to sue under the Age Discrimination in Employment Act. Asking you to sign is legal.

"Question Three: Where do I get advice?

"Don’t try to figure out the finances yourself. Your company’s employee benefits office may have hired an explainer for the duration. Alternatively, see a fee-only financial planner (not a salesperson – page 1176) who can analyze the offer objectively. Anyone given the Golden Boot might be offered several incentives. Typically, they include a higher pension than you’ve actually earned; severance pay, based on your salary and years of service; a modest life insurance policy; and health insurance (partly at your expense) until you’re eligible for Medicare. You’ll get your 401(k) money and your vested pension, if any. If you have choices about your pension, the planner will help you make them.

"Despite all these goodies, early retirees get the short end of the money stick.

"Even if you’re 60 and are offered the pension of a 65-year-old, you’ll lose five years of salary, which would have paid a lot more than the pension does. You also lose five years of earnings that would have bolstered your Social Security check. Still, a Golden Boot is a leg up for anyone with other work in mind. Taking this income as a base, you can write a book, start a business, or accept a lower-paying job that offers you more satisfaction.

" * Always go if your new boss is 20 years younger than you are."

From "Making the Most of your Money Now: The Classic Bestseller Completely Revised for the New Economy" by Jane Bryant Quinn. ISBN-10: 0743269969

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