What Is Voluntary Retirement?

Voluntary retirement is when someone chooses to retire voluntarily. Voluntary retirement can be an advantage to employees when they can choose when they retire, in what circumstances and can plan for it.


Companies can restrict voluntary retirement to specific ages or number of years of service. Employees who voluntarily retire can apply for Social Security if they are disabled or are at least 62 years of age.

In Place of Layoffs

A worker may choose to leave the company sooner than planned to begin collecting a pension rather than being laid off. Companies can encourage voluntary retirement by offering incentive packages.

Cost-Cutting Measures

Salary increases with experience and inflation. Encouraging voluntary retirement saves companies money when pension payouts are based on the average salary of the final years of employment.

Retirement Plans and Uunemployment Benefits

When someone voluntarily retires, the Employee Retirement Income Security Act allows them to access money in their 401k, 403b, 457 and Roth IRAs after age 59 ½. If the voluntary early retirement was taken to avoid a lay off, the employee cannot collect unemployment.

Working After Voluntary Retirement

If someone voluntarily retires, she can work with another company. Companies can offer a job to someone who voluntarily retires, but they can then reduce the severance package or cancel retirement benefits to the returning worker.