Assess a Career Change

Q: I've been with the same company for the last 9 years, and I've recently realized I'm ready for a change. The problem is that I'm 56 years old, and intimidated by the prospect of looking for a new job.

The prospect of looking for a new job is daunting because I haven't been through the interview process in such a long time, and because I'm not sure I can compete with younger job candidates. Do you have any advice?

A: Here are three important things you should think about and weigh carefully.

First, what does the retirement package with your current employer require in terms of years of service, retirement age, post-employment health coverage, stock options, and other bonuses? This is an important question because you are now approaching ten years of service with your current employer and are only a few years away from the traditional retirement age of 62-65. Public and private employers generally handle these matters quite differently. A detailed discussion with your company's Human Resources department is in order, and you can do so without tipping your hand about future plans.

Be sure to ask about pension payout options (lump sum vs. monthly) and IRA rollover. Remember, under most circum-stances, if you leave the company in the near future, IRS rules generally prohibit and severely penalize you from touching the rolled-over assets until you are 59 years of age. If you ultimately decide to leave your current job, but end up taking a lower paying position, you will need to figure out how to lower your cost-of-living for the next few years rather than supplementing it from your existing retirement account.

By the way, if you were thinking about taking Social Security early to help make ends meet, think again. Social Security payments are calculated on your best 35 years of work, averaged and adjusted for inflation.

Although you can start collecting Social Security as early as age 62, you get docked five-ninths of 1 percent for every month you are younger than 65 years of age. This means you will receive 20 percent less per month retiring at age 62 than you would at age 65.