Voluntary Retirement: Benefits, Packages & Considerations

A voluntary retirement is one that you take before you reach the normal or mandatory retirement age. Your company may offer you an early retirement package if it is experiencing financial difficulties or wishes to encourage rotation of employees. Usually payments are less than what you would get had you waited to full retirement age, as companies assess retirement packages based on the number of years of service. However, the advantages of voluntary retirement may outweigh the risks, depending on your circumstances.

Time, Health and Activities

Normal retirement requires you to work for more years than a voluntary retirement--that is, you're older when you take a normal retirement than you are when you take a voluntary retirement. When you retire early, you thus probably will be more physically able to pursue activities you enjoy such as travel or volunteering, especially if your job is physically demanding. You also will have more years in which to do those activities.

Extra Work and Income

Although taking a voluntary retirement effectively terminates your employment with one company, it doesn't prevent you from working elsewhere. By the time you qualify for voluntary retirement, you will have a wealth of on-the-job experience. You may use this expertise to find a different position in the same field or freelance as a consultant. This means you may be able to draw not one, but two paychecks, especially if you are in good health. You may use this income to compensate for the lower voluntary retirement benefits. Alternately, if the benefits are sufficient to sustain you, you may use it to pursue interests or make purchases.

Decreased Stress

If your work environment is stressful, voluntary retirement may get you out of the difficult situation and reduce your stress level. The ability to spend time with family and friends you love and pursue your own interests may decrease anxiety even if your previous work environment was positive. This decreased stress may have numerous additional benefits to your health, such as decreased blood pressure.