Evaluating an early retirement package: A checklist

If one of your clients is offered an early retirement package chances are they will have a relatively short window in which to consider the offer. Help them make an informed decision by taking an organized approach to evaluating the offer. Use this checklist from the Financial Planning Practitioner’s Guide — created by the Canadian […]

By Financial Planning Practitioner’s Guide | June 22, 2006 | Last updated on June 22, 2006

2 min read

If one of your clients is offered an early retirement package chances are they will have a relatively short window in which to consider the offer. Help them make an informed decision by taking an organized approach to evaluating the offer. Use this checklist from the Financial Planning Practitioner’s Guide — created by the Canadian Institute of Financial Planners — to ensure that you have considered all of the implications.

	Yes/No	Action/Details
1. How do the benefits compare to the benefits that your client would have received at normal retirement age?
2. If the employer usually provides for a payout of unused sick-time upon retirement, is this still available?
3. If your client is a member of an RPP, does the package eliminate or reduce early retirement penalties, or will your client’s pension be reduced for life?
4. Does the package provide for continued extended health care or group life insurance? If not, what are the cost implications for your client for obtaining private insurance?
5. Does the package include a lump sum severance payment? If so, will your client be able to roll this payment over into his or her RRSP as a retiring allowance?
6. What are the tax consequences of the package?
7. How will early retirement affect your client’s retirement income? How soon can your client begin receiving CPP and OAS benefits?
8. What is likely to happen if your client does not accept the package? Will the client be transferred? Face a reduction in pay? Face termination shortly down the road?
9. What are the possibilities for your client obtaining another job, or consulting? Is this something the client even wants to consider?
10. Is your client psychologically or emotionally ready for retirement? Has your client considered what he or she is going to do to fill the time?

This template is part of the Financial Planning Practitioner’s Guide created by the CIFPs which is available exclusively to its members. The CIFPs is an association of Canadian CFP™ licensees. The association is an independent, effective and powerful CFP-focused advocate for the CFP™ certification marks and the financial planning profession in Canada.

The Financial Planning Practitioner’s Guide won the “Award of Excellence” in a competition for technical publications sponsored by the Society of Technical Communication

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