Can You Retire From a Company After 25 Years? Your Complete Guide

You’re not the only one who has been working hard at the same company for 25 years and wants to quit. Many people do the same thing after 25 years. The good news is that you can often retire after 25 years of service, but there are a lot of things you should think about before you hand in your resignation letter.

As someone who’s helped many clients navigate this transition I’ve seen both successful early retirements and unfortunately, some financial train wrecks. Let me break down everything you need to know about retiring after 25 years with a company.

Understanding the Rule of 85: Your Ticket to Early Retirement

The Rule of 85 is one of the most important ideas to understand. It says that workers can retire with full pension benefits if their age and number of years of service add up to 85 or more.

So, let’s do some quick math:

• If you’re 60 years old and have worked at your company for 25 years: 60 + 25 = 85 ✓
• If you’re 55 years old with 25 years of service: 55 + 25 = 80 ✗

In the first scenario, you would qualify for full pension benefits under the Rule of 85. In the second, you’d fall short by 5 points.

But wait! Not every employer offers pension plans that follow the Rule of 85. This rule is more common in:

• Government jobs
• Education sectors
• Some traditional corporations with defined benefit plans
• Certain union positions

Eligibility Requirements for Retirement After 25 Years

When you can retire depends a lot on your employer, the industry you work in, and the retirement plans they offer. Here are some common scenarios:

Public Sector Jobs

Many government jobs let workers retire early after 25 years, no matter what age they are. For instance, the California State Teachers’ Retirement System (CalSTRS) lets teachers retire at age 55 if they have worked for the company for at least five years.

Military and Law Enforcement

These careers often have special “20-year retirement” options, meaning you can receive pension benefits after just 20 years of service.

Private Sector

In the private sector, retirement eligibility is typically more age-dependent than service-dependent. However, long-term employees often gain access to better benefits and retirement packages.

Financial Considerations: Can You AFFORD to Retire After 25 Years?

Just because you CAN retire doesn’t necessarily mean you SHOULD. Here’s what you need to consider:

1. Pension Analysis

If you’re lucky enough to have a pension, understand exactly how much you’ll receive monthly. Some key questions:

• Is your pension adjusted for inflation?
• Will your benefit amount decrease if you retire early?
• Can you choose between a lump sum or monthly payments?

2. Social Security Timing

Remember that Social Security benefits can start as early as age 62, but with reduced payments. Full retirement age is between 66-67 for most people today. Delaying until 70 can increase your benefit by up to 24%!

Important note: If you’ve only worked for 25 years total (not just at one company), your Social Security calculation might suffer. The SSA calculates benefits based on your 35 highest-earning years. If you only worked 25 years, the remaining 10 years are counted as $0, potentially reducing your benefit.

3. Healthcare Coverage

This is HUGE! Medicare eligibility doesn’t begin until age 65. If you retire before then, you’ll need to secure health insurance through:

• COBRA (temporary continuation of your employer’s plan)
• Your spouse’s plan
• Individual marketplace plans
• Employer retiree health benefits (if offered)

Healthcare costs can easily derail an otherwise solid retirement plan if not properly accounted for!

The 25x Rule: Do You Have Enough Saved?

One popular guideline for retirement readiness is the “25x Rule” (not to be confused with retiring after 25 years). This rule suggests you should have saved 25 times your planned annual expenses by the time you retire.

For example:

• If you need $50,000/year in retirement: $50,000 × 25 = $1,250,000
• If you need $70,000/year in retirement: $70,000 × 25 = $1,750,000

This rule helps ensure your savings can last through a potentially lengthy retirement, especially if you’re retiring earlier than the traditional age of 65.

Strategies to Boost Your Retirement Income

If you’re looking to retire after 25 years but worried about your financial readiness, here are some strategies to consider:

Maximize Retirement Account Contributions

In 2025, you can contribute up to:

• $23,500 to a 401(k)
• $7,000 to an IRA
• Additional “catch-up” contributions if you’re 50+: $7,500 extra for 401(k) and $1,000 extra for IRAs

Consider Annuities

Annuities can provide guaranteed income during retirement, helping to fill gaps left by other income sources. However, they come with fees and complexities, so consult with a financial advisor before purchasing.

Real Estate Investments

Rental properties can generate passive income during retirement. Plus, real estate often appreciates over time, offering long-term growth potential.

Part-Time Work or Consulting

Many retirees find that part-time work or consulting in their field not only provides extra income but also keeps them mentally engaged and socially connected.

Personal Factors to Consider Before Retiring Early

Beyond the financial aspects, consider these personal factors:

1. Retirement Goals and Lifestyle

What do you actually WANT to do in retirement? Travel? Volunteer? Start a business? Your goals will significantly impact your financial needs.

2. Health Status

Be honest about your current health and family medical history. If longevity runs in your family, you might need to plan for a 30+ year retirement!

3. Family Responsibilities

Do you have dependents? College-aged children? Aging parents who might need care? These responsibilities can affect both your expenses and your decision-making.

4. Social Connections

Many people underestimate how much of their social network is tied to their workplace. Think about how you’ll maintain social connections after retiring.

Example: Can Sarah Retire After 25 Years?

Let’s look at a simplified example:

Sarah is 60 years old and has worked for a state government agency for 25 years. Her current salary is $80,000.

• Her pension will provide $3,000/month ($36,000/year)
• She has $500,000 in her 457(b) retirement account
• She owns her home outright
• She estimates needing $60,000/year in retirement

Analysis:

• Pension: $36,000/year
• 4% withdrawal from retirement savings: $20,000/year
• Total: $56,000/year

Sarah falls a bit short of her $60,000 target, but she could:

1. Reduce her planned expenses slightly
2. Work part-time for a few years
3. Delay retirement by 1-2 years to build additional savings

The Bottom Line: Can You Retire After 25 Years?

So, can you retire from a company after 25 years? The simple answer is maybe. It depends on:

1. Your age (especially in relation to the Rule of 85)
2. Your employer’s specific retirement policies
3. Your financial preparation
4. Your personal retirement goals and needs

Retiring after 25 years with a company is definitely possible with proper planning. It might be easier in some sectors (government, education) than others (private corporations), and it’s almost always dependent on having started your financial planning early.

Next Steps If You’re Considering Retirement After 25 Years

If you’re seriously considering retirement after 25 years with your company, here’s what I recommend:

1. Schedule a meeting with HR to understand your specific benefits and options
2. Request a pension estimate (if applicable)
3. Create a detailed retirement budget
4. Meet with a financial advisor to analyze your complete financial situation
5. Research healthcare options if you’ll retire before age 65
6. Consider a “practice retirement” by living on your projected retirement budget while still working

Remember, retirement is not just about leaving work—it’s about having the financial freedom to enjoy the next chapter of your life. Make sure you’re financially prepared before making this significant transition!

Have you been thinking about retiring after 25 years with your company? What questions or concerns do you have? We’d love to hear from you in the comments!

Disclaimer: This article provides general information and should not be considered financial or legal advice. Consult with a qualified professional for advice specific to your situation.