Employees in the executive branch of state government have ’til this Thursday, the 15th, to apply for the early retirement incentive package Governor Culver and legislators approved earlier this year. Analysts had predicted up to 1,100 workers would opt to retire early and get a bonus plus five-year’s worth of health care benefits.
The number of workers applying for that option has already surpassed 1,100, however. Fifty-seven-year-old Frank Biagioli has worked for the state for 23 years and he’s decided to retire early. “I wasn’t even really planning on it and somebody mentioned that, ‘If you’re 55, you qualify for this program — you ought to look into it,'” Biagioli says. “The more I looked at it, the more I thought, well, maybe it might be the right move at this point in time and perhaps look at something else and do something different after I retire from the State of Iowa.”
He’ll be leaving behind a window-less workspace. “I’ve been in a probably eight-by-eight or eight-by-ten-foot cubicle from ’94 to the present,” Biagioli says. Biagioli will retire in June and he’ll get a check for any unused vacation or sick leave, plus he’ll get $23,000 bonus — $1,000 for every year he’s worked for the state. The maximum bonus for any employee is $25,000 and to get that longetivity bonus, a worker has to have been on the state payroll for at least a decade.
Lorraine Dorfman, a professor in the University of Iowa’s School of Social Work and Aging Studies program, worries the incentive package may not be enough for some workers in their late fifties or early sixties who retire early. “Life expectancy is really increasing and so, you know, it might be that people have 20 or 30 more years more of life to look forward to,” she says, “and you’ve got to plan for that period, not just the immediate ‘take off’ period.”
Dorfman says too many people overestimate their resources and underestimate the cost of long term care, which is not covered by Medicare.
“If one is ready to retire and has thought about retirement and anticipates it, then the liklihood of doing well in retirement increases,” she says. “If you feel forced out, or forced to take the ‘golden parachute’ — that’s a different story.” Dorfman, by the way, is retiring in June at the age of 74 and she urges employees who are thinking of retiring to meet with a financial planner first.
Brock Noel is director of field consulting for the Iowa City office of the “Teachers Insurance and Annuity Association – College Retirement Equities Fund” which manages retirement accounts for many professors, doctors and researchers. “When we look at everything and lay it all out on the table and say, ‘This is what the net effect is going to be if you take this program,’ for some people it looks very good,” he says.
“But, you know, for other individuals they look at it and say, ‘You know, it was nice to be able to think about this and, you know, it’s an opportunity here but I don’t think it’s really for me. I’m not comfortable with the situation and how it’s going to play out,’ and there are plenty of people that do choose not to do it.” Officials estimated the state could save 60-million dollars in salary expenses if 1,100 workers retired early.