Is It Better To Resign Or Retire?

What does retire mean?

When you retire, you are leaving your company and calling it a day. You are hanging up your boots, packing away your suit and tie, and calling it a day on life as a full-time employee. When you retire is often dictated by two things. Your age and time at a company or government service suggest you have been there enough years that you are no longer needed and are free to retire. Or, it can mean that you are finished working now for good by choice or necessity. This could be because you suffered an injury or you are simply not as young as used to be and the work is now too demanding. There is no shame in either of those reasons.

What does resign mean?

Reising from a job means choosing to leave. This could be because you dislike the company, you found greener pastures, or you simply want to take a break from working. This could be temporary or permanent depending on what you decide. You may resign to take a year off, you then might find that you don’t feel like going back to work at all so you simply don’t. This is fine too. It is important to note that you may lose out on a severance check if you choose to resign instead of retire. Or, if you choose to resign instead of being fired on a point of pride. Depending on how long you have worked somewhere, the huge severance check may be worth being fired over resigning.

The differences between retire and resign

The biggest difference between resigning and retiring is one is permanent and one is not. If you retire, you are implying to your employer and the government that you don’t intend on working again. You can come out of retirement, but it isn’t expected. Resigning doesn’t imply anything at all other than that you won’t be working for a while. Whether that while will be for one week while you change jobs or forever is up to you. Whether or not you are even allowed to retire is another question. If you served in the military you can retire in your 40s quite comfortably, you aren’t expected to work again. If you work for the government, you may be able to retire somewhere in the 55-60 age range. It depends on the agency and how long you worked there.

The most complicated part is how your pension is structured. Some pensions cannot be accessed until you have reached a certain age. Or, if it is a company pension a certain amount of years with the company. If you choose to retire at 50 but cannot access your retirement fund until 55 you need to consider whether or not you have the funds to support yourself until then. It is also important to consider whether or not your pension changes in value based on whether you resign or retire. Some pensions pay out more if you wait longer before you retire. It is a good idea to google the company that handles your pension or speak to your human resources department to learn how your pension works.

Is it better to resign or retire?

Whether you want to resign or retire is up to you. The differences mentioned above are important to consider when deciding which choice is better for your situation. It is also important to consider whether or not you plan on working again. If you are only 50, retirement might sound tempting, but an extra 5-10 years in the workforce can make a lot of difference. You likely have very little debt by now, so all of the income earned in those extra years can certainly come in handy. It is also a good idea to consider your 401k. If you max out your 401k contributions to the absolute limit you’re allowed, you will get that money back very soon and then a whole lot more on top of that. Private pensions and government pensions have different rules about how much you can withdraw, so it is important to double-check the exact rules for your pension(s).

What other options are there?

If neither of those options appeals to you there are some alternatives. If you still feel like you want to work but are starting to struggle with the workload you could transition to working part-time. This way, you are still bringing in some money and working towards building your pensions/401k but the workload is easier for you to manage. Many companies find this far more preferable to resignation or retirement because you will still be around. Whether it is to provide training and consultations or to just help out here and there. Alternatively, if you are just looking for a break for a few months it is possible to take a temporary leave of absence. This is essentially just an unpaid long vacation.

Conclusion

Whether retirement or resignation is better is up to you. Everyone has a different situation so it is hard to give one definitive answer. That being said, you should probably aim to retire. Even if that means working for another 5 or so years. It is not worth risking your pension. It is so important to clarify with your pension provider what would happen if you resigned vs retired. Hopefully, you now have a good idea about which is best. It is important to take your time and make an informed decision. A mistake could be very costly.