Amid a soft economy, and the ever-present possibility of a merger or acquisition, many workers age 50 and above are finding themselves forced to decide whether to accept a company offer to retire early. When the offer comes, you may not have much time to decide, so you'll need to sit down quickly with your financial advisor to review your options.

One of the first decisions you'll need to make is whether you'll be laid off anyway if you reject the early-retirement package. Reject it, and you could end up with something much less generous if you get laid off later.

This isn't always easy to gauge. A company looking to reduce its workforce in order to reduce costs or eliminate jobs as part of a merger may first offer a voluntary early-out package. If there are enough takers, the remaining jobs may be secure. If not, involuntary layoffs may occur. Sometimes companies announce that the offer is strictly voluntary, and no layoffs are planned. Others won't say. You'll need to weigh the strength of your specific job, your division, the company and the industry. If you think you'll get the boot in the end anyway, taking the early-retirement package will likely be the best deal, even if you don't want or can't afford to retire yet.

Assuming that you don't feel compelled to take the retirement offer, examine the details more closely to see whether it's worth accepting. Early-retirement packages come in all shapes and sizes. If the employer has a traditional company-paid pension plan, they may offer to add tenure and age. For example, a large telecommunications company recently offered to add five years of service to the retiring employees' tenure, and increase their age five years. The result is a higher monthly pension payout since payouts are usually based on a combination of the employee's age, years of service and wages.

However, unless you're very close to retirement, you probably won't end up with as high a pension payout as you would receive had you worked to full retirement age. You'll need to run some numbers with your financial advisor to determine how well you can live off the offered pension, coupled with Social Security and your other retirement savings, or whether you want to turn down the offer and keep working.

What are your other sources of income? What will be your expenses? What important benefits will you need to replace? Of course, if you feel compelled to take the offer, and it's not enough, you'll have to find a new job.

Many employers with pension plans may offer only lump-sum payments instead of sweetening the pension payouts. Traditional pension plans are less common today, too, so a lump sum may be your only choice.

Another critical factor in accepting or rejecting an offer is health benefits, because you're likely to be years away from being eligible for Medicare (age 65). The offer may or may not include full or partially subsidized health care benefits. If taking the early offer means loss of coverage, you'll either have to pay for it out of pocket or find coverage with a new employer. The main thing is, say financial planners, don't go without coverage.

What kind of severance payout do they offer? If they'll continue your salary for a while, you don't take that option while you look for work. If you want to start your own business, a lump-sum payment is probably preferable. Also figure in the loss of such benefits as vacation and sick days, and life and disability insurance.

Consider less tangible factors, as well. Someone with marketable skills is in a better position to take the early out than someone without them. Someone who's been wanting to leave anyway will undoubtedly find the package very enticing.

You may have some room to negotiate, too, particularly if you occupy an executive position with a high salary and a long history with the employer. You might be able to get better health benefits or a larger pension payout. Consequently, don't rush to accept the initial offer until you've evaluated it carefully. Unfortunately, you probably will have only a month or two at the most to decide. That's why it's ideal if you can get wind of such an offer before it occurs, and run some preliminary numbers with your advisor.

July-30- 2001