At What Age Should We Offer Voluntary Retirement?

Constructing a voluntary retirement program can be a complex task. There are many things to consider, such as what local, state, and federal laws you need to follow, what benefits will be extended to the outbound workers, and – one of the most common questions – at what age can a person join the program?

When it comes to choosing what requirements a staff member may need to take up the voluntary retirement incentive, the question of age comes up a lot. This is largely because the traditional retirement age is 65, which means that any exit before that age can come with potential downsides like lost benefits, healthcare coverage, pensions, and more.

While these issues need to be explained to the worker, there is no set age that individuals need to hit before they are offered an early retirement plan.

To better understand this, let’s look at the how the government handles this sort of thing.

According to the National Institutes of Health (NIH), who publish all of their early retirement requirements online to the public, staffers are able to sign up for the program after they reach the age of 50 and have worked for at least 20 years for the federal government.

This type of plan is pretty common and generally involves staff members over the age of 50 or 55 who have completed a certain amount of years at the company, ranging from 20 to 25 years.

However, NIH also allows people who are any age and have worked 25 years for the government to take an early retirement package. This means that if someone started working there at age 20, they can take up the offer and retire at age 45, far below the 65 traditional age.

It’s important to note that when someone retires at a young age, their benefits may change as well, though it is very important to make sure that you do not change what benefits you, as an organization, offer based on age.

That sounds a bit confusing but it is to make sure you are not discriminating against workers. You have to offer the same extended benefits packages to anyone who takes the offer. It’s important, though, to explain that some federal benefits – like social security – can change if a person retires earlier than age 65. This is not on the organization but is instead just a side effect of the early move.

It’s also vital that you work with your legal counsel to make sure that your early retirement package is compliant with all local, federal, and state laws, which are in place to protect workers from discrimination and also from signing on to a program that is malicious or generally confusing.

You can read more about the ins and outs of voluntary retirement here. If you’d like to learn more about the pros and cons of the incentive, check out this downloadable guide:

Josh Hrala

Josh is an HR journalist and ghostwriter who's been covering outplacement and offboarding for over six years. Before pivoting to the HR world, he was a science journalist whose work can be found in Popular Science, ScienceAlert, The Huffington Post, Cracked, Modern Notion, and more.