Facing an Early Exit from Your Job?

Here’s What You Need to Know Before You Sign Anything

When your employer presents you with a severance agreement or early retirement package, it’s hard to know what to feel. 

There’s the immediate shock, maybe even a sense of relief, but beneath that, real questions start to pile up. What happens to your health insurance? Will the money last? And what exactly are you agreeing to give up? 

Horn Wright, LLP, helps professionals across New York understand the financial and legal consequences of workplace exit offers. Our business transaction lawyers don’t just skim the surface. We break down every clause, every number, and every assumption so you can walk away confident in your decision.

Early Retirement vs. Severance: They Might Look the Same but They’re Not

They may arrive in the same envelope and carry the same official tone, but severance agreements and early retirement offers are built on very different foundations. Understanding how each one works isn’t just helpful. It’s critical to protecting your financial future.

Severance typically includes:

• A payout tied to years of service. This is often calculated as one or two weeks of pay for each year you worked at the company. While it’s intended as a cushion, the amount may not reflect your full value, especially if you’re in a senior role. Depending on your company’s policy or leverage, there may be room to ask for more.
• COBRA health insurance continuation. This lets you stay on your company’s group health plan temporarily, but you’ll pay the full premium out of pocket. In New York, that can mean $600 to $1,200 per month, depending on the plan and dependents. It's crucial to budget for this shift in monthly expenses.
• A waiver of legal claims. Most severance agreements include language requiring you to release your employer from any future lawsuits, including those related to wrongful termination. Once signed, you’re typically prevented from pursuing legal action, even if new concerns come to light later.

Early retirement packages are voluntary and often framed as a positive exit. But they come with their own set of considerations.

• Bridge payments or bonuses. These are designed to help cover costs until you qualify for pension or Social Security benefits. It might look generous on paper, but the amount has to last possibly for several years. Be sure it fits into your full financial plan.
• Extended health insurance options. Some companies offer continued benefits until you turn 65 and become Medicare-eligible. However, coverage can vary, and not all plans include dental, vision, or dependents. Know exactly what’s being provided and for how long.
• Pension-related incentives. Offers may include enhancements like added years of service or early payout eligibility. While attractive, these benefits may still result in lower long-term income compared to staying employed longer. Carefully compare projected monthly benefits over time.

If you’ve ever worked with commercial contract attorneys in New York, you know the wording of an agreement is just the beginning. What’s not said matters just as much.

Questions Worth Asking Before You Accept Early Retirement

Before you commit to stepping away, take time to evaluate what this shift really means—financially, legally, and personally.

• Are your savings on track? Leaving at 57 instead of 65 means eight more years of withdrawals and eight fewer years of contributions. That gap can impact everything from your investment growth to your lifestyle. Use AARP’s calculator to get a clearer picture.
• How will you manage healthcare? If you’re not yet 65, private coverage may be your only option. In New York, that can cost $1,000 or more monthly, even with a high-deductible plan. Check New York State of Health for estimates.
• Would you want to work again? Many people who retire early end up reentering the workforce, whether out of need or purpose. But age discrimination remains a real barrier in many fields. 
• What restrictions are in the agreement? Many offers include non-compete or confidentiality clauses that could limit your future career options. Understand how long these provisions last and whether they’re negotiable.

It’s easy to get drawn in by the size of a severance or early retirement package. The number may look impressive at first glance, maybe even life-changing, but what it means long-term isn’t always obvious. 

Between taxes, rising living expenses, and unpredictable markets, that large payout may shrink faster than expected. Before making any big decisions, it’s essential to evaluate not just how much you're being offered, but how far that amount will actually go in supporting your future.

Can Your Retirement Plan Really Support the Years Ahead?

You’re not just stepping away from a paycheck. You’re entering a new financial phase that may last 20 to 30 years. The structure of your benefits matters more than ever.

• Pensions may be reduced. Many plans cut your monthly benefit if you retire before reaching full retirement age. For example, some reduce payouts by 4% to 6% for every year you retire early. That kind of reduction adds up over decades.
• Social Security pays less when claimed early. Claiming at 62 can reduce your benefit by up to 30% compared to waiting until full retirement age. That reduction is permanent. Use the Social Security Administration’s early retirement calculator to understand the impact.
• 401(k) contributions stop the day you leave. That means no more employer matches and fewer years of compound growth. Even missing a few years of contributions can cost tens of thousands in lost savings.
• Early withdrawals come with penalties. Tapping retirement accounts before age 59½ can trigger a 10% Internal Revenue Service (IRS) penalty, plus income taxes. Unless you qualify for an exception, that’s a steep price to pay. Here’s what the IRS says.

These long-term consequences are one reason many people seek advice from mergers and acquisitions lawyers before signing anything, especially when large amounts of money or complex assets are involved.

You Don’t Have to Accept the First Offer. You Can Renegotiate.

You’re not required to sign the first offer that lands in your lap. In fact, many early retirement and severance packages are built with room for negotiation, especially if the company wants to avoid disputes or preserve morale. 

Whether it’s a higher payout, more months of health insurance, or adjusted restrictions, you’re allowed to ask for terms that better reflect your contributions and needs.

You can negotiate compensation. That might include increasing a lump sum, getting paid for unused paid time off, or modifying when your benefits end. You can also ask for non-cash benefits like job search support, executive coaching, or an official title change that strengthens your résumé.

You should also review the fine print with scrutiny. Clauses like non-compete agreements, non-solicitation terms, and confidentiality requirements can have lasting effects. Don’t assume standard language is automatically fair or final. Companies often expect pushback from senior employees.

If you’ve worked with corporate governance legal advisors in New York, you know these agreements are business deals, not farewell gestures. They’re negotiable and the outcome should reflect the value you’ve brought to the company.

Federal law gives workers over 40 at least 21 days to consider a severance package involving a waiver of age-related claims and another 7 days to revoke it after signing. 

Work With Professionals Who Know How to Protect What You've Built

Our business transaction lawyers at Horn Wright, LLP, help professionals across New York make sense of early exit agreements. 

We know how to analyze every term, flag legal risks, and position you for the most secure outcome possible, whether you’re retiring, transitioning, or negotiating a business sale and purchase agreement.

We’re proud to be recognized among the country's leading law firms, and we bring that level of care to every client interaction. 

Contact our office today to schedule your complimentary case review.  You've earned your seat at the table. Let’s make sure your exit reflects that.