(FORTUNE Magazine) – When Dow AgroSciences offered Mike Steckler an early-retirement package a year and a half ago, he wasn't sure what to do. Not quite 52 at the time, Steckler, a manager with the Indianapolis-based subsidiary of Dow Chemical, had been planning to keep working there for at least two more years. He figured he'd need that time to accumulate enough money to afford a longed-for but much less lucrative second career: teaching at a university in China with his wife, Randi. The early-out offer would give him a cash payment worth about 15 months of salary, plus a pension (though a pension worth less than if he stayed until normal retirement age). "If we choose this, can we still have a reasonably secure financial future?" Steckler wondered.

If you're in your 50s and work for a large company, you may soon face the same question. With the economy continuing to sputter, employers like Chrysler, Procter & Gamble, and AOL Time Warner's Time Inc. division (which publishes FORTUNE) have begun to proffer early-retirement packages. Assuming business conditions remain challenging, the trend seems likely to increase. And companies typically allow you only one to two months to decide whether to accept the offer--precious little time, considering that retiring is "one of the biggest decisions of your financial life," says Gary Schatsky, a financial planner in New York City.

So how do you size up an offer? Before we get to that, a word about what's changed since the recession of 1990-91, which unleashed a wave of early-retirement offers. Back then, when 401(k) plans were less popular and stock options were distributed much less widely, an enhanced pension was the centerpiece of such a package. Pensions are typically calculated on the basis of some combination of your age and years of service. Ten years ago, "five plus five," or an offer to tack on five years to an employee's age and another five to his years of service, was typical. But New Providence, N.J., financial planner Diahann Lassus says that companies have gotten stingier since then. These days, some buyout offers, like Steckler's, provide lump-sum cash payments up front instead of adding years to your pension. (While most large old-economy companies still offer pensions, they're becoming rarer--so if you don't have one, a cash-payment offer is all you're likely to get.) Still, generous deals do exist: Chrysler's offer in March, which bridged employees as young as 53 up to age 62, meant that some got a full pension nine years ahead of schedule--and all got a voucher toward the purchase of a new car. No surprise that nearly 2,300 salaried employees, or almost six in ten of those eligible, accepted Chrysler's offer.

Here's how to figure out if saying yes to an early-retirement offer makes sense:

Compare what you're being offered now with what you'd get if you stayed to normal retirement age. While pensions vary widely, they frequently kick in once your age-plus-service number totals 75--you're 55 years old and have worked at the company for 20 years, for example. If you keep working longer, you often get more. Once you reach the company's stated retirement age, commonly 65, you qualify for the maximum benefit--say, 50% of your last year's salary for the rest of your life. No matter how sweet your deal is, you'll almost always take a financial hit by retiring early. Reason: The longer you wait, the higher your final-year salary and therefore the higher your pension--not to mention that more years will elapse before you'll need to start drawing down your dough. Of course, if you're fed up with your job, the relevant comparison may not be with what you would get if you stayed to 65 but with "what you would get if you just walked out the door" now, says Lassus. In other words, nothing.

Check the extras. Consider the value of benefits you might be giving up by accepting the offer--such as vacation, sick days, and company-paid insurance. These could really cost you. While the early-out packages of a decade ago often included generous health insurance, now fully subsidized coverage for retirees is much less common, says Lew Altfest, a New York City financial advisor, because of rising health-care costs and accounting changes. If you'll be paying for your own health coverage, figure on at least $4,000 a year for a single person and twice that for a couple until Medicare kicks in when you hit 65.

Evaluate your own savings. A company pension is only one part of your retirement income, of course; Social Security (which you can't start drawing until age 62) and your own savings make up the rest. To figure out if all that will be enough to fund a comfortable retirement, it's crucial to run the numbers (see box on the next page for help). You might need more income than you think. "People who retire in their 50s are traveling, they're playing golf," says Lassus. "Their expenses could actually be higher then than they are now."

Says Dee Lee, a certified financial planner in Harvard, Mass.: "Inflation is your biggest enemy if you're retiring at 55." If inflation averages 3%, an annuitized pension that pays $60,000 a year will have the buying power of less than $45,000 in ten years. Even if you take your pension as a lump sum and roll it over into a carefully invested IRA, you're not out of the woods, since you'll need to make it last for the rest of your life. "If you're 55 or 60, you might live another 40 years," says Janet Briaud, a financial planner in Bryan, Texas.

Think about whether your job will still be there if you don't take the package. It's illegal for a company to force an employee into early retirement. But many pessimistic financial planners say that if you get an early-out offer, you should almost always take it--even if running the numbers shows that you'd be better off financially by waiting. Why? "Because the next package isn't going to be as good," says Lee. In other words, if your company is intent on ridding itself of workers, there's nothing to prevent it from downsizing you involuntarily down the road--without the sweeteners you're being offered now. One way to gauge how vulnerable you'd be if you stayed: Is the company offering early-retirement packages throughout the company or only to employees in certain divisions? If the answer is the latter and you're in that group, your chances of getting canned anyway may be high.

Altfest says that more than half of his clients who accept early-out offers continue to work, often as consultants. With less generous packages, you may have no choice. But don't count on making as much money as you do now. "Some people who have been part of a major corporation for a very long time may have had some wage inflation," says Kate Wendleton, president of the Five O'Clock Club, a career counseling group.

Of course, plenty of people like Mike Steckler want to start a new career in their golden years. So what did he do? After running the numbers with certified financial planner Erik Falconer, Steckler figured that he could swing leaving Dow to get an early start on his dream. "There were financial penalties," concedes Steckler, who has already begun a teaching job in Shanghai. "But there were these huge opportunities to do what we wanted to do too."

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