Federal employees in 2025, this year has brought an unprecedented wave of VERA (Voluntary Early Retirement Authority) offers, and many of you might be considering taking advantage of this unique opportunity. But the critical question remains: Is a VERA as good as a normal retirement? The short answer is that in some ways, yes, it’s actually better, but in others, no, it’s not. Today, let’s break down both sides of this complex decision.
What is a VERA?
A VERA is a special type of retirement offer that allows federal employees to retire earlier than they would under normal circumstances. It’s essentially a tool the government uses to reduce its workforce by encouraging early departures. To qualify, you generally need to meet one of two criteria:
Be at least 50 years old with 20 or more years of federal service.
Have 25 years of federal service at any age.
However, simply meeting these requirements doesn’t guarantee you a VERA. Your agency must also be offering them, and you must be included in the eligible group. This is different from a standard retirement, where eligibility is purely based on your age and years of service.
Why a VERA Can Be Better
The most significant advantage of a VERA is that it allows you to retire earlier. Under normal FERS (Federal Employees Retirement System) rules, you generally need to wait until you reach your Minimum Retirement Age (MRA), which is around 57 for most employees, or meet other age and service milestones, like age 60 with 20 years of service or age 62 with 5 years. With a VERA, you can potentially walk out the door years earlier if you’re financially prepared.
For someone who’s ready to retire but just waiting to hit those age milestones, a VERA can be a perfect solution. It allows you to start receiving your pension right away, keep your Federal Employees Health Benefits (FEHB), and begin enjoying your post-career life sooner than you otherwise could.
The Trade-Offs – What You Lose
Of course, no major life decision comes without its downsides, and the VERA is no exception. Here are the key trade-offs you should be aware of:
Smaller Pension – Your pension under a VERA will almost always be smaller than it would be if you stayed until a full retirement. That’s simply because your pension is calculated based on your years of service and your “high-3” average salary (the average of your three highest-earning years). Fewer years of service means a smaller pension check for the rest of your life.
Reduced TSP Growth – If you retire early, you stop contributing to your Thrift Savings Plan (TSP), and you also miss out on potentially significant compound growth. This can add up to a substantial amount over the years.
Delay in FERS Supplement – If you retire before your MRA, you won’t receive the FERS supplement (sometimes called the Social Security supplement) until you hit your MRA. This supplement can be a crucial part of bridging the income gap between early retirement and Social Security eligibility at age 62.
COLA Delay – For those under 62, your FERS pension won’t receive cost-of-living adjustments (COLAs) until you turn 62, potentially leaving your income flat while inflation slowly eats away at your buying power.
Making the Right Choice
So, is a VERA worth it? The answer depends on your financial situation, career goals, and personal readiness for retirement. Here are a few key considerations:
Financial Readiness – Do you have enough savings in your TSP, other retirement accounts, or personal investments to cover the years until Social Security kick in?
Healthcare Coverage – Have you had your FEHB coverage for the past five years, ensuring you can carry it into retirement?
Lifestyle Goals – Are you prepared to live on a smaller pension, or do you plan to work part-time or launch a second career?
Peace of Mind – Are you comfortable with the potential financial trade-offs of retiring early?
Final Thoughts
A VERA can be a fantastic opportunity for those ready to leave federal service and embrace the next chapter of their lives. It offers flexibility and early access to retirement benefits that might not otherwise be available. However, the financial realities of a smaller pension and reduced TSP growth should be carefully considered. At the end of the day, your comfort with these numbers and your broader financial plan will determine if a VERA is right for you.
If you need personalized advice on your federal retirement, consider talking to a financial planner who specializes in helping federal employees. Understanding the full picture can make all the difference in making a confident retirement decision.
Stay informed, plan well, and you’ll be ready for whatever path you choose.
