By Marcia Mantell

Today is a day like all the others. You get to work, grab a cup of coffee and open your email. There's a message from human resourced marked urgent. It's an offer for you to retire early. Due to your age and years of service, your company has deemed that you are eligible to retire. You must make your decision in the next 30 days, then transition out of gainful employment and into early retirement 90 days after. A huge decision.

Turns out, today is not a day like all the others.

First Reactions to an Early Retirement Package

"No, I'm not going to take the package," Shelly recalls. That was her first reaction when the large company she worked for sent her the offer to retire early. It was her 53rd birthday and her 25th anniversary working for the company. A gold watch and a letter from the CEO arrived along with a plaque recognizing her 25 years. But the early retirement offer was not exactly a welcome gift. It was completely unexpected and caught her off guard. She simply wasn't in that headspace and had never even considered early retirement.

In a similar situation, Kim opened her email to find an offer to retire early as she met the age 55 with 10 years or longer service requirements. She read it, stared at it, reread it, and thought, "Oh, my gosh! I've been hit by the lucky stick!" It was her immediate response and almost too good to be true. Kim had been working at her company for over 20 years, and while she felt she could continue to work there forever, she also felt boxed in. In this moment, when opportunity seemed to come knocking, Kim could sit back and wonder, "Is there more out there somewhere for me?"

(These are real clients, who have asked that their names not be included in this column.)

After a good night's sleep, Shelly woke the day after her unexpected offer to this thought, "What was I thinking? Of course, I'll take the package!" She put on her new gold watch and realized that this was a sign that her years at this company had come to an end and she was being presented with a graceful exit strategy.

How to Make the Decision

As the dust settled, there were many real and practical things to consider before walking out the door of a company. What about the mortgage? Most folks in their mid-50s still carry a mortgage, including Kim and Shelly. How long could they reasonably be out of work and keep the house? Both women have college tuition payments. Shelly's youngest is a senior in college. Kim's youngest is 15 and in high school, so she's got four years of tuition looming. What kinds of spending cuts or sacrifices would have to be made to their current lifestyles? It might be that vacation plans and home improvements would have to move to the back burner. Who could they turn to for sound advice?

As a single mom, Shelly talked to several people, including her trusted advisors and her children. With no second income coming into the household, this decision had the potential to affect her young-adult children significantly. However, she felt confident she could handle the financial side of the decision and still help her daughters. But, what about the career side? After all, she was in her early 50s and employers may not be interested in hiring "older folks". So, she sought out professional opinions and advice. Did her professional network think taking an early retirement package was a good idea? Was it reasonable to expect to land a new professional job with comparable salary and benefits? She heard loud and clear from her professional network that she was not too old to start a new career. She should just be aware that some compromises may be necessary, especially relocation and a temporarily reduced salary.

Kim called her husband after reading the fateful email, asked what he thought about the possibilities. She wanted him to weigh in on the realities of her leaving her vice president job and the loss of her paycheck. He did a quick back-of-the-envelope assessment and felt confident that they would be fine. She wanted time and space to figure her next steps out. It was a luxury to have such an opportunity. For the past several years, they had worked to pay down their debt (but still had a mortgage) so they were able to take advantage of this opportunity.

This Is Not Retirement

When one hears "early retirement package," it's easy to think that retirement is on the horizon. But that's not necessarily so for many of those in their 50s. Considering the level of unpreparedness many boomers in their 50s are facing, early retirement is not likely. The latest data on the amount of retirement savings is certainly better than in prior years, but still woefully low for most. The average retirement savings is almost $164,000 for those aged 56 to 61. For those ages 50 to 55, the average saved for retirement is about $125,000. (Economic Policy Institute report, 2017) Neither group is in a very comfortable situation for early retirement and may well need the extra dozen or more years of earnings to achieve a comfortable retirement.

So, it's no wonder that one reaction many get from co-workers when they announce they will take the package is surprise. They can't believe these younger colleagues are retiring. The unspoken question is, "How can you afford to retire so young?" The reality is that most of the 50-somethings will go on to find new jobs. They look at this package not as a pathway into early retirement, but rather as permission to explore new fields, start a new career, and to take some time to reevaluate what they want to do and where they want to go over the next 10 to 20 years.

Shelly thought of her offer more like a generous transition package. If she didn't take it, layoffs were likely coming, and those future packages might not be so generous. She felt that taking the package was better than rolling the dice. But, there is no word or label for this opportunity. It's not a layoff, it's not quitting, it's not a force-out, and it's not early retirement. While people were sorry to see her go, it was still awkward, and co-workers felt a sense of betrayal at the company. Shelly didn't feel that way, and truly believed this was her choice. It was a career decision, not a retirement decision. It was about moving forward to career No. 2.

Kim also found that there was no label, so she looked at this unexpected offer as a sabbatical. Her younger daughter arrived later in life when her career was booming. She didn't step off the career track at 40, so now had a chance to spend some quality, and quantity, time with her youngest child. As most professional women acknowledge, she feels she missed out on some of the joys of motherhood and here was a gift of time handed to her. Now, she'd get her turn to be a full-time mom. Most women don't get second chances, and she was grabbing this one. Her sabbatical would allow her time with her daughters, as well as time for herself to unwind and reprioritize. She would paint (art, not walls), work in her garden, cook and entertain, and enjoy an unrushed cup of coffee in the morning with her husband of 30 years.

Is This Too Big a Risk?

We read every day that Americans haven't saved enough for retirement and that women have longer life expectancies and longevity. We know healthcare costs in retirement will be significant and that more women end up single by late in life and may run out of money. In fact, within the 90 and older population, women outweigh men 3-to-1. Said another way, for every 100 women who are 90 or older, there are only about 35 men in the same age group. Women will live a long time in retirement.

So, why would these women jump at the chance to leave their jobs? Aren't the risks too high? Would they really find a new job that was going to pay as much as they were earning as a long-time employee at their company? Were they crazy? Sure, people wondered out loud if this wasn't too risky a move, and some even thought they were nuts. A few acquaintances were even critical. And many were quick to advise that they had a good thing going here, so why not just stay?

Working in corporate America today is not so easy. Most people are not in charge of their careers and have little control over the most important parts of their days. There is no job security and it is incumbent upon each person to manage his or her own career to the best of their abilities. It's too easy to get pigeon-holed into a department or a job function after many years at one company. You are seen as an asset and are a reliable worker. And frankly, it's often harder on your manager if you were to change roles.

"Part of my decision was based on the fact that I needed to continue to better myself. Personally, professionally, financially," Shelly said. She wasn't getting any younger, so why not take this opportunity to breakout of the routine and try something new. Sure, there is some risk involved with leaving, but there was also more risk involved in staying in place. There were no promises if she'd stay employed with the long-time company. And, when she really thought about it, she was simply marking time. She was thoughtful about the move, deliberate about how to approach career number two, and the timing was just ideal.

"I lost sight of the fact that I could be a leader. I had become myopic, my environment was too insular," Kim said. It is easy for women to take their areas of expertise for granted after many years. They forget that not everyone can do what they do and that they have so much value. Within a large organization, it's easy to forget they have worth, expertise, knowledge and leadership. One day they realize they're just sitting there in the background making things run, keeping the lights on, not feeling the excitement of something new.

The true gift of an early retirement package is time. You have breathing room to think about your options and make thoughtful decisions. Try new things. It's a time to reflect on your years of experience, confidence, and capabilities. You are free to network without constraints, and rebuild faith in yourself and your abilities. For both Kim and Shelly, there are no regrets. They feel it was a luxury to have the chance to branch out and find the right next job without the usual financial pressures. They got a chance to be picky about their future.

Advice for Women in Their 50s

Get ready for opportunities that may be coming your way. That was the main message from both Kim and Shelly. If you aren't already thinking about the possibilities, years in advance, getting an early retirement email may be a bombshell. Use age 50 as your mile marker. Take a hard look at your financial picture at home and start making some decisions, especially around debt repayment and your mortgage. It takes a long time to fully right your household finances, so the earlier you start, the more prepared you'll be if and when something happens.

Here's some advice recommended by Kim and Shelly:

  • Ask yourself three questions: What do I really want? If I don't have it all, why not? Have I really taken control of my career or have I been content to let someone else choose my job for me?
  • Don't be afraid to take a career leap in your 50s. There is no job security. The risk is small. It won't be easier to find a job in your 60s.
  • The job market is receptive to your energy, not to your age. Prepare an ageless resume and focus on what you've done in the past 5 to 10 years.
  • Be confident. You have experience, skills, knowledge. Not everyone can do what you do. If you've raised a family, you now have freedom and wisdom.
  • Look at your priorities: family, financial, professional, personal. Where do you want to spend your time and resources now?
  • Learn the new technology. Like it or not, social media and technology are here to stay. Demonstrate that you're tech savvy and current.
  • Build a strong network and reconnect with colleagues. Especially use LinkedIn to full advantage.
  • Be prepared for a long job search. Many jobs are online, but recruiters and your network are more helpful.
  • Take a lateral move or even a step down for the right opportunity. Stepping sideways is not a bad way to go.
  • Use any resources offered by the employer you are leaving: seminars, resume writing classes, career coach, etc.

About the author: Marcia Mantell is the founder and president of Mantell Retirement Consulting, a retirement business development, marketing and communications and training company supporting the financial services industry and its clients, and is author of "What's the Deal with Retirement Planning for Women" and the blog BoomerRetirementBriefs.com.

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