how much to spend on retirement gift

Retirement Gift Spend (for Colleagues, Family & Friends)

Retiring from work is the event that closes a chapter on a person’s life, freeing them to move forward into a new way of living. It is an exciting time for the retiree.

Co-workers, friends, family, and employers need to find a suitable gift, or do they?

No-one, not even an employer, is obliged to give a retirement gift. Still, there is something uncomfortable or distasteful about not celebrating an employee or co-worker’s last day at work.

A retirement gift doesn’t have to be expensive – co-workers typically spend between $10 to $30 on a contribution and $10 to $100 on a personal gift, depending on how well they know the retiree. An employer can expect to pay between $100 and $1,000, but that amount includes potential events, flowers, champagne, and a corporate gift.

Every situation is different, and you need to approach it with common sense and an idea about standard behavior in your workplace.

How Much Should You Spend on a Retirement Gift

Deciding on the appropriate retirement gift amount depends on many factors, including:

Relationship Length

A retirement gift for someone you have worked alongside for thirty years means more than for someone you have known for three weeks.

The amount you choose to spend or contribute to a joint gift increases with the length of the relationship.

Relationship Depth

Working for twenty years in the same office as another person does not mean you have a relationship with them.

In a large workplace, you may not know their name. Even if you know them, you might not have a working relationship. Or, you may have worked with someone for as little as a year and found them to be helpful, friendly, and great to know.

Your relationship with the retiree influences the appropriate retirement gift amount for you.

Then there is family retiring from work. You don’t work with them, but you are likely to want to acknowledge their retirement with a gift.

Chain of Command

Workplace dynamics are like those in tribes and families – there is a pecking order with some people being higher up the food chain than you. Others are at the same level, and some you outrank.

Your feelings of obligation to giving a retirement gift depend on your position relative to the retiree.

Workplace Culture

Remember what it is like when you have your first day in a new place? You know how to do the job, but it is the office culture you have to learn.

Some places you take turns at tea making, others you make only your drink with the occasional favor for a colleague.

Every office and shop floor has a set of unwritten rules for how things work around here. Sometimes there is more than one set of unspoken rules, depending on which team you join.

Retirements don’t come around that often, there may be no rules in place, and everyone makes it up on the spot. Generally, there is a corporate culture to gift-giving with written or unwritten rules.

If you are new, ask around and find out what people do when it comes to retirement or other gift-giving occasions.

What About Cash?

how much cash for retirement gift

Cash is the most versatile gift, but generally, as adults in Western culture, we don’t make cash gifts from one adult to another.

Money tends to be the gift of choice in family circumstances, but even there, most people opt for the gift card rather than an envelope stuffed with cash.

On retirement, an employer may give a cash gift to an employee, but you need to consider tax law in your area. The law varies between states and countries on taxation. The legislation covers both cash gifts and the value of other presents (including all associated costs of a party).

Still, the retiring employee may appreciate a substantial cash retirement gift from the employer, even if they have to pay tax on some of it.

Some retirees look on the inevitable retirement collection as a chance to donate funds to a cause they champion. If the cash is paid directly to the charity, then it is likely there are no tax implications, but it is still worth checking the rules in your area.

The retiree gets a certificate telling them how much their retirement fundraised.

At the retirement event, a modest bottle of wine or chocolates is appropriate as a token gift.

If the retiree is a family member and they want to set up a workshop or hobby room or embark on an epic road trip, you may prefer to give a substantial cash gift to help them realize their dream. Family rules make cash acceptable, and collaboration creates a sizeable cash gift.

Retirement Gift Guide for Employees

retirement gifts for employees

As an employee, you face more than one possible retirement scenario:

  • Co-worker
  • Boss
  • Nominated to organize a group collection

Co-Worker Retires

When a co-worker retires, you can:

  • Give a personal gift.
  • Contribute to group collection.
  • Give a personal gift and contribute to a group collection.
  • No gift or contribution.

If you don’t have a relationship with the retiring co-worker, you won’t contribute to a gift or feel the need to give one at their retirement. The exception is if you attend a retirement party – unless the invitation specifies no presents, most attendees will take along a small gift.

Most people spend between $10 and $100 on a personal gift with the precise amount depending on what they can afford, the chosen gift, and their relationship with the co-worker.

An inexpensive, thoughtful gift such as one of these tea gifts specifically curated for retirement, is better than an excessively expensive gift that embarrasses your co-workers and the retiree.

Group collections tend to receive between $10 and $30 from donors. If you are contributing to a collection and buying a gift, you can donate a token amount or nothing.

Retirement Gift for a Boss

Unless you have a strong, personal relationship with the boss, most people contribute to a joint gift from the team.

There are exceptions, but generally, as an employee making a gift to the boss, it is always a collective effort.

Collecting for a Group Gift

Someone needs to collect the money and source the gift and make the arrangements for the presentation. If it is you, you have the delicate task of collecting money from your co-workers without causing discomfort or offense.

Not everyone can or will donate to a group collection for any gift, even a retirement one. Their reasons are personal and can include affordability, gifting fatigue, and they prefer to give an individual present.

But, how do you ask coworkers for money for a retirement gift?

The collection process needs to be anonymous (for the amount given) and straightforward. The traditional approach is to buy a large retirement card and put it in a brown envelope.

A note attached explains who is retiring and who is organizing the collection. A list of potential donors is attached or written onto the brown envelope. The envelope passes around for people to put in money, write on the card, cross out their name, and pass it on to another person.

This method is best for small workplaces with a high level of trust that no one is going to pocket part of the collection while it is making the rounds of potential donors.

The alternative is to have a sealed collection box and send round a message inviting donations into the box. Donors sign the card located next to the collection point. This method works best for large offices and workplaces.

Technology gives an alternative collection method – gift websites. Some websites let you set up a gift collection converted into gift vouchers for the recipient. Donors remain anonymous, and as the organizer, your job finishes when you circulate the information.

Retirement Gifts as an Employer

how much should a company spend on a retirement gift

Although giving retirement gifts is optional, the absence of a visible retirement gift sends a clear message to the remaining staff. The news that you don’t appreciate their service to your company.

As an employer, you need to handle the retiring of a staff member gracefully and generously.

Being generous does not mean spending an excessive amount of money and breaking the annual budget. Large organizations with an HR department will have rules covering the standard retirement approach with a guide to how much is an appropriate retirement gift amount from an employer.

Small organizations need a strategy for corporate gifts because this makes the boss’s life stress-free.

A standard formula can include years of employment and salary level on retirement as a way of calculating the appropriate retirement gift amount from employer – with a maximum amount depending on circumstances.

Gifts to employees on appropriate occasions improve or destroy staff morale, depending on how you handle the task.

Generally, amounts between $100 and $1,000 are acceptable for the whole retirement package depending on your company size, the employee’s position, and taxation rules. Most companies adopt a formula for calculating the amount spent to demonstrate a fair approach to all.

For a small budget, stick to the basics – flowers, champagne, and a personalized gift of a plaque or a memento of working life.

More money in the pot can mean more luxurious gifts or gift vouchers, giving the employee the freedom of choice of gift.

As an employer, you may choose to pay for a retirement event – how much to spend on a retirement party?

A retirement party comes under the heading of staff entertainment and is usually a taxable benefit. A token amount like $10 per person as a budget generally stays within the rules.

Take advice – inviting clients can turn the event into marketing. And it is not unreasonable for customers to attend the retirement of an employee when they have worked together for a long time.

Retirement Gifts for Family

retirement gift for family member

When it comes to buying a retirement gift for family, different rules apply. The amount you spend will depend on how much you can afford and how close you are to that family member.

Mom or Dad are the people you want to spend the most on. Retirement is significant for your parents, and you want them to launch into their new life with enthusiasm.

There is no problem with a thoughtful token gift bought or made with love. Still, if you can afford a luxurious gift, you are not going to offend your parents by spending lavishly on this occasion.

The same rules apply when it comes to grandparents, but when your grandpa or grandma retires, you are probably at the beginning of your working life.

Affordability is essential, but imagination and creativity mean you give a personal gift they will appreciate for a price you can afford.

Uncles and aunts are likely to retire around the same time as your parents. Buying these family members will depend on your relationship with them, and if they invite you to a retirement party.

Most large families have gift-giving rules because the expense of constant gift-giving is prohibitive, but retirements, like weddings, are considered unique.

You might not usually buy your aunt or uncle a birthday or Christmas gift, but you might want to contribute to a family retirement gift.

Then there is the scenario your siblings and their partners start to retire, along with yourself. Retirement gifts for brothers, sisters, brothers in law and sisters in law and their present for you is best dealt with by family agreement.

You may prefer to have a holiday or event so you can celebrate all the retirements on one occasion or have a collection for each retirement event for a family gift.

Retirement Gift Giving Etiquette

The etiquette of giving retirement gifts in summary is:

  • Give only to people you know well; or
  • Give a token of respect for their working life; or
  • When attending a retirement party.

Is it appropriate to take a gift to a retirement party?

The primary point is to honor the retiree’s wishes – they may not want a present or prefer a donation to a good cause. The chosen gift needs to be meaningful and appropriate to the recipient’s plans for retirement or a memento of their working life.

Otherwise, a tea gift for retirement – like a gift basket, a personalized mug, or a tea set represents your desire for them to enjoy a more relaxed pace of life now they are no longer in employment.

Celebrate Retirement

The amount you spend is a combination of what you can afford and what is an appropriate retirement gift amount. How much you should spend on a retirement gift depends on your relationship with the co-worker, friend, or family member.

Whatever the amount you decide, you need to focus on the thoughts and emotions you wish to express with your gift. A gift in any circumstance represents your bond with the other person.

When that person is a co-worker, the retirement gift is a combination of admiration and goodbye. A retirement gift to a family member reflects your wishes for their future happiness because family remains in your life after retirement.

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