What does a "silver handshake" refer to in retirement plans?

A "silver handshake" refers to an incentive offered to employees to encourage them to retire early, often involving bonuses or enhancements to their pensions. This term typically describes voluntary retirement packages that provide financial incentives, such as a lump-sum payment, to lure older employees, which can benefit both the organization and the individual. For organizations, this strategy can reduce labor costs and offer opportunities to bring in younger talent, while employees can gain financial assurance for their future after leaving the workforce sooner than they might have initially planned.

The other choices, while related to retirement, do not accurately describe the concept of a "silver handshake." A mandatory retirement age refers to legal requirements rather than incentives; transitioning to a retirement account involves procedural steps without the financial incentives; and government-sponsored programs, although providing retirement benefits, do not align with the notion of an incentivized early retirement package.