Understanding Workers’ Compensation and Retirement Impacts

July 3, 2024
Stern & Cohen
retired couple walking together in nature

Navigating your workers’ compensation claim and the possibility of voluntary retirement can be complex for injured employees. While workers’ compensation is designed to provide financial support for employees injured on the job, voluntary retirement signifies a deliberate choice to exit the workforce. Understanding how these two concepts interact is crucial.

The impact of retirement on your workers’ compensation benefits depends on your specific circumstances. Consulting an attorney before deciding to retire is essential to determine how your rights will be affected.

Voluntary vs. Involuntary Retirement

When it comes to receiving workers’ compensation benefits after retirement, the first question is whether the individual voluntarily removed themselves from the workforce.

Voluntary retirement is a personal decision made by an employee to leave the workforce. To show that an employee retired voluntarily, an employer must prove, by a totality of the circumstances, that the employee has chosen not to return to the workforce. This involves examining the employee’s intention: if they were able, would they choose to continue working? Determinations as to whether an employee voluntarily retired consider factors including whether the injured employee is looking for other work, whether the employee refused to transition to a suitable light-duty position, and whether the employee accepted a retirement pension.

In contrast, involuntary retirement, or forced retirement, occurs when an employee is required to leave their job against their will due to a work-related disability. If an injury leads to permanent disability that prevents the employee from returning to their previous role or any other suitable work, they may be forced to retire involuntarily.

Impact on Workers’ Compensation Wage-Loss Benefits

Retirement alone does not automatically disqualify an employee from receiving workers’ compensation benefits. Generally, a person who has been forced into retirement due to a work-related illness or injury can still receive workers’ compensation benefits. However, an employee who voluntarily retires from the workforce may experience a termination or reduction of their benefits.

If a person voluntarily removes themselves from the workforce, they are no longer entitled to receive wage-loss benefits. Wage-loss benefits refer to financial compensation provided to employees who are unable to work or experience a reduction in income due to a work-related injury or illness. These benefits are designed to replace a portion of the wages lost as a result of the injury. When a person voluntarily decides to retire, regardless of disability, their inability to earn wages is no longer injury-related.

Assuming a person’s injury was initially accepted in full, whether a person retires voluntarily or involuntarily, medical expenses related to the work-related injury will be covered by workers’ compensation.

Therefore, if you decide to retire voluntarily, you may not be able to continue receiving workers’ compensation wage-loss benefits – including temporary and permanent disability benefits. However, if a person involuntarily retires because their work-related injury prevented them from working in any capacity, they may still be entitled to wage-loss benefits. The rationale is that an injured worker forced to retire no longer has an income – workers’ compensation wage-loss benefits help fill the gap between earning potential before and after a workplace injury. This includes permanent disability benefits, which, faced with involuntary retirement, you may still be eligible to receive.

If you have been forced to stop working permanently due to a work-related injury or illness, you may be eligible for continued wage-loss benefits.

Impact on Workers’ Compensation Medical Benefits

Whether a person retires voluntarily or involuntarily, medical expenses related to the work-related injury will be covered by workers’ compensation. Medical benefits refer to the coverage and compensation provided for necessary medical treatment and services related to a work-related injury or illness. These benefits are generally not impacted by your retirement status and can include coverage for medical treatment, diagnostic testing, rehabilitation services, and transportation costs.


Navigating workers’ compensation and retirement requires careful planning and consideration, whether retiring voluntarily or facing forced retirement. Understanding the distinctions between voluntary and forced retirement is critical for employees nearing the end of their careers and employers managing workforce transitions. By proactively addressing these considerations and seeking professional guidance, individuals can effectively navigate this pivotal stage of their professional lives with confidence and preparedness. Contact us to settle your claim before deciding on voluntary retirement.