Forced Retirement

AAA

DEFINITION of 'Forced Retirement'

The involuntary ending of one's career because of a layoff, health problems or disability. Forced retirement can have a significant negative effect on workers' retirement plans if they are unable to earn several years' worth of income that they anticipated and/or they are forced to take Social Security benefits early. However, just because a worker is forced to retire from one company does not mean she can't seek employment with a different company or pursue self-employment.

INVESTOPEDIA EXPLAINS 'Forced Retirement'

When most people think of retirement, they think of choosing when they will leave their jobs - usually when they have reached a certain age or accumulated enough savings to live off of comfortably for the rest of their lives. Forced retirement removes this choice from people and can be disruptive to future plans. Sometimes companies that downsize will offer employees who are close to retirement age an early retirement package. This is basically a severance package by another name. In some cases, these may be employees who would have been fired no matter what because of poor performance; in other cases, companies may want to cut older workers because they tend to have higher salaries than younger workers.

RELATED TERMS
  1. Normal Retirement Age - NRA

    The age at which people can receive full benefits upon leaving ...
  2. Retirement

    When a person chooses to leave the workforce. The concept of ...
  3. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  4. Retirement Planning

    The process of determining retirement income goals and the actions ...
  5. Retirement Readiness

    The state and/or degree of being ready for retirement. Retirement ...
  6. Employer's Liability Insurance

    A product for employers that protects them from major financial ...
Related Articles
  1. 3 Common Excuses For Not Contributing ...
    Savings

    3 Common Excuses For Not Contributing ...

  2. Managing Income During Retirement
    Budgeting

    Managing Income During Retirement

  3. Saving For Retirement: The Quest For ...
    Retirement

    Saving For Retirement: The Quest For ...

  4. Will Your Retirement Income Be Enough?
    Retirement

    Will Your Retirement Income Be Enough?

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center