Q:

What benefits will be lost if an employee formally retires?

A:

Quick Answer

The benefits an employee loses when he retires vary depending on the company's policies. Benefits lost may include health care coverage, the ability to contribute to a pension plan, profit sharing benefits and life insurance coverage, advises Bankrate.

Continue Reading

Full Answer

After retirement, individuals can no longer contribute to a 401(k) or IRA. The IRS allows individuals to contribute a limited amount each year that does not exceed the person's total salary. In addition, employers that match contributions do so based on salary, so these contributions will also stop upon retirement.

Profit sharing plans are also often based on an employees compensation, states Bankrate. Upon retirement, employees usually lose access to these plans.

Health coverage options will also change after retirement. Employees may lose coverage or be able to obtain coverage through COBRA, or the Consolidated Omnibus Budget Reconciliation Act, according to CNN Money.

Retirees who are 65 years or older may be eligible to Medicare and no longer need employee sponsored health care.

Some companies offer life insurance for their employees. When an individual retires or reduces his hours before retirement, the terms of the policy may change, leaving people under insured and spouses with a lack of death benefits, advises Bankrate.

Learn more about Financial Planning

Related Questions

Explore