We’ve talked to several clients recently who have been offered early retirement under VERA, the Voluntary Early Retirement Authority. The question each of these clients has had is the same: Should I take VERA?
VERA is a long-standing option agencies can offer during downsizing or significant restructuring. The benefits of separating from the Federal Government are substantial because if you retire under VERA, the age and service requirements are reduced. This increases the number of employees who can retire early from the Federal Government, and it has several implications for your retirement benefits, including:
- No reduction in your FERS annuity if you retire under the age of 55
- The ability to draw your FERS supplement beginning at your minimum retirement age through age 62
- The option, in many instances, to continue your Federal Employee Healthcare Benefits into retirement
In thinking through whether or not to accept VERA, start with a few key questions as follows:
Are future layoffs likely? VERA is optional for agencies and must be approved by the Office of Personnel Management, so it’s not a given that VERA would be offered in a future round of layoffs. If you suspect future layoffs are likely and you would be impacted, the current offer of VERA might be the best offer you’ll receive.
Were you planning to retire soon? An earlier retirement under VERA might be feasible if you plan to retire soon. If you already have a retirement plan, update it to include your FERS and FERS supplement estimates to see if you can make the numbers work. If you don’t have a plan, you could estimate retirement income and expenses to get a general idea of how feasible retiring earlier would be.
How does the job market look for you if you still need to work? If you’re not in a position to retire but think taking the early out is the best option, try to sketch out what might come next. Specifically, estimate how long it might take to find your next job and your likely salary. You’ll want to make sure you’ve got some source of cash – ideally reserves – to cover any shortfall between your FERS retirement income and expenses during the period you’re looking for your new job.
In both the case of early retirement and moving on to another job, you’ll want to confirm your eligibility for FEHB, as health insurance coverage is key if you’re not yet eligible for Medicare. Beyond that, there are likely a number of other issues you’ll want to consider before accepting an offer under VERA, but beginning with the three questions above will provide a good foundation as you determine how to move forward.