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Money Smart: Top 5 questions to answer before accepting an early retirement package

Here are KENS 5’s top 5 Money Smart questions to answer before you accept an offer.

SAN ANTONIO — Companies are faced with an uncertain economic future during the pandemic. As a way to cut costs or avoid layoffs, they may roll out with early retirement packages to employees. Here are KENS 5’s top 5 Money Smart questions to answer before you accept an offer.

1. Question: Do you like your job?

“There’s a lot of emotional issues that you have to reconcile and do you want to go leave that company and potentially go work for another company? Or retire,” said Karl Eggerss, senior wealth advisor and partner of Covenant.

2. Question: Can I afford to retire?

“Do you have something else lined up? In other words, if you can’t afford to retire, you have another job lined up that you’re wanting to go to. Because it could turn out to be a good thing that you actually get an incentive to leave,” explained Eggerss.

3. Question: Do I take a monthly pension or lump sum?

“For example, I have a client that’s a pilot for Delta. He’s going to get a pension for like $5,500 a month for the rest of his life, if he retires. Well, what if Delta goes bankrupt? That payments just a liability of the company so there’s no guarantees. Maybe he wants to take a chunk of money right now and walk away and be separate from the company,” said Eggerss.

4. Question: What do I do with my 401(k)?

“You have some options in your 410(k) but if you roll it into an IRA, you may have many more. Do you know how to invest that, have you been paying attention to it for the last several years or has it been on auto-pilot,” he said.

5. Question: Where will I get health insurance?

“If you’re not 65, you’re not eligible for Medicare, where are you going to get your health insurance? Or if you decide to work for another company, have you looked at the benefits?” asked Eggerss.

If you have the option to negotiate the terms of your early retirement package, an attorney or financial advisor can help guide you. For more information about Covenant’s financial services, click here.

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