When You Want to Retire but ‘Golden Handcuffs’ Keep You Working

Perks like a pension can also be a problem for retirement.

I finished my master’s degree and landed my first teaching job a month after my 22nd birthday. I saved, invested, worked summer jobs and didn’t give in to lifestyle inflation. I’m also a buy-and-hold real estate investor and manage my own properties. I purchased my first foreclosure at age 26 and still own it — 26 years later.

Fast forward 30 years, and I’m still an educator. I’m also ready to retire, but I can’t. I don’t mind that I can’t collect my pension until I’m 55, but I can’t quit teaching yet, either. Well, I can quit, but I won’t and you probably wouldn’t either. That pension is a set of “golden handcuffs” keeping me working even though I’m ready to do something else.

See: 13 Surprising Things About Early Retirement You Need to Know

Understanding the ‘Golden Handcuffs’

I’ve worked in public schools and colleges in New York for 28 years and at a private college for two years. My state retirement system tier requires 30 years of public school service, or my pension at age 55 will be significantly pro-rated. Anything under 30 years of service at age 55 reduces my pension by over $13,000 per year.

Another option is to quit teaching now and wait until I’m 62 to “officially” retire and collect my full pension. But waiting seven additional years to start collecting doesn’t make sense, either. So, even though I’d like to devote more time to building my business, the “golden handcuffs” incentive keeps me teaching. Thankfully, I still enjoy working with students.

Read: 12 People Who Retired Young (and How They Did It)

Your Options If You’ve Got ‘Golden Handcuffs’

I did decide to leave full-time work to pursue other interests, though. I am teaching online and doing per diem work to keep building service credit. I make a lot less money and don’t have benefits, but I have more flexibility than ever.

I’m spending my first full winter “snowbirding” in Florida away from a cold and snowy western New York winter.  I consider myself semi-retired, and if I am still “handcuffed” to teaching students in New York, this is a great way to do it.

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Here are five things you can do if you’re in the “golden handcuffs” of an employer and have to put in more time to earn a pension, employee stock options, deferred payments or special bonuses.

  1. Give up the money and leave your job if you are truly miserable at work, or if you’ve saved so much money that staying for the incentive isn’t worth your time. Understand the financial implications of leaving, but remember more money can’t buy back more time.
  2. Grow your emergency fund and pad retirement accounts so that if you want to move on, you’ll be more financially prepared to do so.
  3. Consider what you need to stay on the job and earn the incentive. Would working from home one day a week or down-shifting to part-time keep you working? Loosening the handcuffs might be a win-win for you and your employer.
  4. Start a small business that can distract you from focusing on the time you have left to work. When you’re in control, your business may grow enough so you don’t have to worry about the handcuffs anymore.
  5. Put your health above everything else. If work comes before your health now, it’s time to shift your focus. When the handcuffs come off, you want to be able to enjoy the incentive you worked for. Join a gym, take vacation days and do whatever you can to reduce stress.

Find Out: What It Takes to Save $1 Million for Retirement

Because there are fewer jobs with pensions today, you might think “golden handcuffs” are destined for a similar fate. But remember, the cost to hire, train and retain talented and highly experienced employees isn’t going anywhere. Creating a lucrative incentive package to get key employees to remain in their positions — happy or not — is the goal of many employers. The “golden handcuffs” may look different, but they’re likely to keep many employees working for years to come.

Click through to read more about 10 jobs that still come with a pension.

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About the Author

Vicki Cook is a freelance writer and personal finance blogger behind the sites Make Smarter Decisions and Women Who Money. She enjoys writing about real estate investing, financial independence, career decisions, and travel.