An early retirement offer may be extended to you by an employer seeking to reduce staff. Though the offer may seem tempting, there several factors to keep in mind before deciding whether or not to take it.

The most obvious consideration is the severance package itself. Find out how much additional compensation will be paid. Consider whether or not the amount will be large enough to get you to your planned retirement date or at least large enough to cover expenses until a new job is found. Then look at the payment options. A lump sum provides the most flexibility, while deferred payments reduce the tax impact on a given year.

At the same time, review your current financial picture. Project retirement expenses (adjusting for inflation and taxes) and compare the number against your expected income and projected savings withdrawals. Social Security benefits can help, but claiming early (e.g., at age 62) will result in reduced income for the remainder of your life. If it is not financially feasible to retire early, it may make sense to turn down the early retirement offer. Before doing so, think about the likelihood of maintaining employment at your current employer if the offer is not taken.

If you have not qualified for your full pension benefits, see if the offer includes some type of an adjustment. An employer might add years to your age or length of service to help you qualify for a larger benefit. There might otherwise be a temporary boost to last until Social Security benefits are paid.

Inquire about health insurance. Will your employer continue to offer health insurance? How long will the coverage last and what will be the premiums? If employer coverage is not an option, then COBRA, individual policies and/or coverage through a spouse’s plan should be looked into. The lack of good options for medical insurance can be a reason to turn down the early retirement offer, especially for a person who is not old enough to qualify for Medicare.

Then ask about other benefits. Some employers may offer life insurance, financial planning assistance, career counseling, educational programs or even extend the period during which stock options can be exercised.

Source: “Evaluating an Early Retirement Offer,” Captrust Financial Advisers, July 22, 2016.