Getting an Early Retirement Pensions

April 29, 2010 - PRLog -- The rules for early retirement and collecting on a pension can vary greatly from country to country; however, the considerations regarding early retirement may behoove some pensioners to retire earlier than others.  

Many individuals may opt for early retirement based on health and in the UK, the government provides for 100% of a pensioners fund as a tax-free lump sum when stricken with a serious medical illness.  But there are other situations that may afford you an option to receive an early retirement pension and here are some considerations you should make before deciding to do so as it is likely that the enticements you will be extended will very likely not offset the drawbacks to early retirement and understanding what you are being offered is crucial in the decision-making process.

Understanding how your pension is calculated is fundamental in determining whether it behooves you to take and early retirement pension as most are calculated in two parts; severance and an enhanced pension.  Severance is typically calculated at one or two weeks of pay per year (sometimes more).  The second part of the arrangement could be as much as five years added to your age and job tenure to sweeten the deal.

Keep in mind you must typically work until age 62, in the US.  The younger you are, the more your pension will be reduced.  Using the most common pension formula which is typically years of service multiplied by 1.5%, multiplied by your salary, if you are 55 and earn $100,000 and have been working at the same company for 20 years, using the formula above, you would earn $30,000 per year in annual retirement income, but to collect a full pension, you would need to work to age 62.  So you need to understand how much you would receive at full retirement age to determine the whether the deal you are being offer is acceptable.

To be certain your are in a position to get an early retirement pension, be sure to talk to you financial advisor who can go over your deal with you and help you understand just what you may be sacrificing to retire early. learn more here http://www.economywatch.com/investment/pensions/early-ret...

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