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 Readiness

    The state and/or degree of being ready for retirement. Retirement ...
  5. Retirement Planning

    The process of determining retirement income goals and the actions ...
  6. Poison Put

    A takeover defense strategy in which the target company issues ...
RELATED FAQS
  1. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  2. How does comprehensive income get reported on my 1040?

    As of 2015, on the standard IRS Form 1040, your comprehensive or total income is calculated through lines 7-22. This is different ... Read Full Answer >>
  3. What protections are in place for a whistleblower?

    Whistleblowers can play a critical role in ensuring the compliance, safety, honesty and legal fairness of governments and ... Read Full Answer >>
  4. What is the key difference between the participation rate and the unemployment rate?

    The participation rate and unemployment rate are economic metrics used to gauge the health of the U.S. job market. The key ... Read Full Answer >>
  5. How do modern companies assess business risk?

    Before a business can assess or mitigate business risk, it must first identify probable or likely risks to its bottom line. ... Read Full Answer >>
  6. Why has emphasis on corporate governance grown in the 21st century?

    Corporate governance refers to operational practices, management protocols, and other governing rules or principles by which ... Read Full Answer >>
Related Articles
  1. Savings

    3 Common Excuses For Not Contributing To A Retirement Plan

    If you're not participating in your employer-sponsored retirement plan, there may be some easy solutions.
  2. Budgeting

    Managing Income During Retirement

    Learn some sensible strategies for making your hard-earned savings last for as long as you need them.
  3. Retirement

    Saving For Retirement: The Quest For Success

    We'll show you how to set yourself up to retire in style.
  4. Retirement

    Will Your Retirement Income Be Enough?

    Find out how to determine whether you're on the path to a comfortable retirement, or financial ruin.
  5. Retirement

    Top 3 Retirement Savings Tips For 55- To 64-Year-Olds

    Find ways to save money and increase your nest egg for the fast-approaching golden years.
  6. Options & Futures

    What's The Minimum I Need To Retire?

    Make sure your golden years are golden, not merely a struggle for existence.
  7. Budgeting

    The Demise Of The Defined-Benefit Plan

    Experts are making bleak predictions for your post-work years. Be prepared and plan for your future.
  8. Investing Basics

    Will Nepotism Kill Wal-Mart?

    Wal-Mart recently appointed Greg Penner, grandson-in-law of its founder to the post of Board Chairman. Should investors be concerned about nepotism?
  9. Personal Finance

    Hiring a Nanny? 20 Questions to Ask First

    How to find a caregiver who'll fit into your family – and which questions you can't ask.
  10. Investing

    Has Nepotism Ever Worked?

    It may very well be that hiring a relative is the right course of action for you. But before you do, carefully consider how hiring family could hurt your business.

You May Also Like

Hot Definitions
  1. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  2. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  3. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  4. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  5. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
  6. Himalayan Option

    An exotic equity option belonging to a class known as mountain range options. Himalayan options are based on a basket of ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!