When you are getting close to your retirement age, you might want to know the difference between retiring and resigning. I’ll tell you all about it in this article.
The difference between retiring and resigning is that when you retire, sometimes you still can receive (social) benefits like healthcare and a pension. These benefits vary per company. To be able to retire, you need to reach a certain age or minimum length of service. Resigning means you voluntarily quit your job, which means you’re not eligible for those benefits.
Let me tell you more about the difference between resigning and retiring and why it is important to retire instead of to resign. Also, I’ll explain the most important steps of how you can prepare for your retirement.
Retiring vs. Resigning
The only similarity between retiring and resigning is that with both processes, you quit your job. However, they’re both very different. Not only the outcome is different, but also the way you need to prepare for each process differs. Let me tell you more about the basics of each process.
It is important to know that this is purely meant informational. Processes for both retiring and resigning can vary per job position and company. The rules in each state and even company can also differ. When you’re thinking about retiring or resigning from your job, make sure you’re informed about the rules of your company. Often you can find these rules in the personnel guide. Ask your manager or HR department for the latest information.
Process of Resigning
Resigning from your job is relatively easy. Often, the only thing you need to do is writing a resignation letter with a one month notice. This notice period can vary per company.
It is not quite as simple as it sounds, there are a few other things you need to think of before you decide if you can resign.
Of course, you need to ask yourself if it’s financially attractive to resign? When you don’t have a different source of income or a new job, how can you make sure that you can still pay all the monthly bills?
It is also possible that you followed a course or education that is paid by the company. If this is the case, often you’re obliged to stay at the company for several years after you finished this course. Most of the time, you signed a separate agreement, where you can find all the terms, also when you decide to resign. If this applies to you, make sure to find out if you need to pay the company back the costs of the education.
When you resign from your job, you’re probably not eligible for health insurance and other social benefits. It is essential to know this before you resign because not having health insurance can be problematic.
If you’re thinking of resigning, I always would recommend getting some professional advice before you make your decision. This way, you make sure you save yourself a lot of trouble. And if all the lights are green, and you still want to resign? Good for you, go write that resignation letter!
Process of Retiring
The process of retirement is entirely different. Yes, it also ends with you quitting your job, and you probably need to write a retirement letter to make everything official.
However, when you’re eligible for retirement, you often can keep your healthcare insurance and other social benefits for a specified period. Most people also saved up a lot of money during their career, intended to use as a pension. When you retire, this money comes available for you to use during your retirement years.
If you’re eligible for retirement depends on many factors that vary per company and state. Retirement is a process that people plan for years in advance. Many companies have retirement policies where you need to start the process for retirement even months before your official retirement date.
It is important to know all the details. I recommend getting professional financial advice before starting your retirement. And if you’re still many years away from your official retirement age, it’s also important to already think of when you want to retire. How much money do you need in retirement, and how you can start saving for that big day ahead. And what you want to do in retirement, because you need take the costs for your retirement plans and dreams into account as well.
The most common retirement savings plan is called 401k. Named after the tax code that governments use. It is a retirement savings plan that is sponsored by the employer/ company you work for. It allows you to set aside a part of your paycheck before taxes. A financial advisor can help you out with sorting out all that essential information.
How To Announce Your Retirement
Now you know more about the difference between retirement and resigning, you probably want to know more about the important steps in how to retire. After all, I’m here to give you tips and tricks about your retirement. So that you can enjoy your retirement in the best way possible.
Announcing your retirement can be different for everyone. The steps and processes can vary for each company, but the basics are the same everywhere.
There are basically five steps when announcing your retirement;
- Step 1: announce your retirement verbally to your boss.
- Step 2: write a retirement letter directed to your boss and send a copy to HR.
- Step 3: announce your retirement to co-workers.
- Step 4: share your retirement plans with family, friends, and clients.
- Step 5: announce your retirement on LinkedIn and social media.
The hows, and when you need to complete these steps, vary. I wrote the article ‘How To Announce Your Retirement,’ where you’ll find an in-depth guide on how to cope with these steps.
What To Write in Your Retirement Letter
Writing your retirement letter can be a difficult task. Even when you’re used to writing formal letters, this one can still be an emotional job.
Many people retire from their jobs after working for decades at a specific company. Sometimes in the same posts, and sometimes in different job posts. Either way, you built up a relationship with the company, with your colleagues, and probably also with your boss.
It is important to keep in mind that the primary purpose of your retirement letter is to announce your retirement. You can always reflect on your career in a later stadium, and maybe while giving a speech at your retirement party. However, you can add a short part in your retirement letter where you thank your colleagues and show your gratitude for the company.
So, a retirement letter is a formal notice. It needs to contain specific details like your retirement date and personal information. It is important to write your retirement letter with a positive voice. Even when you’re not in a positive mindset about the company, you never know how you feel in a few months. So try to keep things positive.
Your retirement letter doesn’t have to be an epistle. It is enough to write a short, positive, and formal letter. Limit your retirement letter to three paragraphs, something like;
- First paragraph: start date of your retirement.
- Middle paragraph: express your gratitude and highlights of your career.
- Final paragraph: well wishes for co-workers and company, what you’re looking forward to in retirement, and offer help for the transition.
If you want to know more about how to write your retirement letter, I recommend reading my article How To Write A Retirement Letter. This article contains several examples of retirement letters and other useful tips.
How To Prepare For Your Retirement
Preparing for your retirement starts, of course, many years for year actual retirement date. When you start with your retirement savings plan, for many people, their 401k plan. If you want to know more about the 401k saving plan, I recommend visiting the official website of the IRS and ask at your company.
However, many people start to prepare for their retirement a few years or months before their retirement date. First, you finish all the official steps, with giving notice to your employer, write your retirement letter, and maybe start planning your retirement party.
When you finished those steps, it is time to think about how your life is going to be when you’re retired. And this process can be overwhelming for many. Maybe your spouse is not retiring yet, and you need to figure out together how life is going to be. Maybe you have a large bucket list with activities you plan to do when you’re retired. One thing is for sure, you don’t have to work anymore once you’re retired, and you can do everything you want!
I wrote many articles about retirement that might be helpful for you. A few of the most popular articles are;