VSIP + VERA: Should You Take the Money and Retire Early?

A check for $25,000… and the ability to retire years earlier than expected? That’s exactly what’s on the table for thousands of federal employees being offered both VSIP (Voluntary Separation Incentive Payment) and VERA (Voluntary Early Retirement Authority).

So let’s ask the big question: Should you take it?

FIRST, THE BREAKDOWN

VSIP is the incentive payment — up to $25,000 (pre-tax) to leave your position voluntarily.

VERA is what makes that early departure retirement-eligible — not just a resignation. That means you could walk away with an unreduced pension even if you haven’t hit your usual retirement milestones.

Here’s how VERA works:

• Age 50 with at least 20 years of service — you qualify.
• Any age with 25 years of service — you qualify.

It’s a huge opportunity… but not without risks.

“I CAN RETIRE EARLY? WHAT’S THE CATCH?”

Let’s be clear: this isn’t a bad deal.
But it’s not a no-strings-attached jackpot either.

Yes, you can retire earlier than normal — and still collect a pension. But there’s a hidden cost most people overlook:

❗ No cost-of-living adjustments (COLAs) until age 62.

That means if you retire at 50 or 55, your pension stays flat for up to 7–12 years. And we all know what inflation does during that time — it quietly eats away at your buying power.

Imagine living off a $30,000 pension in 2025… and still getting $30,000 in 2032 while rent, groceries, gas, and medical premiums all go up. That’s the real impact of retiring before your Minimum Retirement Age (MRA).

THE $25,000 VSIP – BOON OR BAIT?

Now let’s talk about the check.

The VSIP payment is designed to make early retirement feel sweeter. And it can be — but keep this in mind:

• It’s fully taxable — so expect to net around $17,000–$19,000
• If you return to federal service within 5 years, you’ll have to repay it
• It’s a one-time deal — you don’t get a second chance

For many employees, that payment is icing on a cake they were already planning to eat — they were close to retirement, ready to exit, or had something else lined up. If you were already going to retire, it may be an easy decision to make.

But for others, it can be a shiny distraction that pulls them away too soon, without a plan for inflation or future income. Some of you may not get the choice later though, if you are RIF’d or laid off.

WHO THIS MAKES SENSE FOR

✅ You meet the VERA requirements (50 w/20 years, or 25 years at any age)
✅ You’ve run the numbers and understand the inflation risk
✅ You have a bridge plan — another job, pension stacking (think Military Pension or VA Disability etc), or private savings or inheritance
✅ You’re emotionally ready — burnout, family needs, or new goals
✅ You don’t need full COLAs right now — or plan to work part-time in retirement (this last one is big, as it can truly help your retirement savings season and grow for when you really have to lean on it for income)

WHO SHOULD BE CAREFUL

⚠️ You’re barely at 50 or younger, and inflation will eat away at your pension
⚠️ You’re not done saving — and haven’t built enough TSP IRA Roth or cash reserves
⚠️ You haven’t considered the FERS Supplement and how long it will (or won’t) last
⚠️ You’re still covering kids’ college and mortgage

Remember, if you leave now, there’s no going back.

THE FERS SUPPLEMENT & AGE 62 FACTOR

One more important piece: the FERS Supplement.
If you retire under VERA, you may be eligible for this bridge payment to Social Security — but only once you hit your Minimum Retirement Age (MRA).

That could be age 56 or 57 depending on your birth year.
Retire at 50, and you could be waiting 6–7 years before that income starts.

By the way — even once it does start, it ends at age 62 when Social Security eligibility begins. So it’s helpful, but it’s not forever. And no COLA increases occur on this payment.

A REAL-LIFE SNAPSHOT

One federal employee with a High 3 of nearly $130,000 — 53 years old, 26 years of service. VSIP + VERA offer on the table. Pension? About $2,800/month. Tempting, right?

But after accounting for:

• No COLA until age 62
• Healthcare FEHB premiums reducing the pension
• No FERS Supplement for 3+ years

…a realization that the numbers didn’t quite work unless he or she had other income lined up. You may want to take the offer — but needed a few more puzzle pieces in place first.

You’ll need a bridge plan — now, you’ll know exactly when to go, how much you’ll need each month, and how to protect against inflation until COLAs kick in.

SO — SHOULD YOU TAKE IT?

Maybe. Maybe not.
But one thing’s for sure: Don’t take the offer blindly.

Ask yourself:

• Are you truly financially ready?
• Do you understand how inflation will affect your pension?
• What will you be retiring to? What will you do with your time?
• What’s your income plan between now and Social Security?

You earned the right to retire on your terms — but that means knowing all the terms first.

FINAL THOUGHTS

VSIP + VERA is like a flashing sign that says:
🚪 “Exit available. This way out.”
But before you open that door, make sure what’s on the other side is a life you’re prepared for — and excited about.

Realistically some may not get to decide after this offer is gone, but it sure helps to prepare and plan nonetheless. And Unemployment for some months or longer may be available to you as well, hello!

If you’re on the fence, or just want to run the numbers, find a professional who understands and knows your benefits, and the planning necessary to bring you the income you’ll need.
Build a plan that’s based on you — not just what the government is offering.

You only retire once. Make it count.

To your success —