Is an early out right for you?

Tammy Flanagan, Senior Benefits Director, National Institute of Transition Planning

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By Jolie Lee Federal News Radio

As the budget ax falls, more agencies are considering buyouts and early retirement offers.

To name a few: At the Defense Department, 1,100 employees accepted buy-outs this year so far, and the department will consider early outs as one of its “workforce shaping tools.” USDA will offer more than 500 buy-outs. And the Postal Service is eliminating 7,500 positions, offering $20,000 buyouts.

“Because...

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By Jolie Lee
Federal News Radio

As the budget ax falls, more agencies are considering buyouts and early retirement offers.

To name a few: At the Defense Department, 1,100 employees accepted buy-outs this year so far, and the department will consider early outs as one of its “workforce shaping tools.” USDA will offer more than 500 buy-outs. And the Postal Service is eliminating 7,500 positions, offering $20,000 buyouts.

“Because of what’s happening with the economy and the budget debt crisis and all of that, I think there’s fear we’re going to lose our jobs,” said Tammy Flanagan, senior benefits director at National Institute of Transition Planning.

Agencies can offer a VERA – voluntary early retirement authority or early outs – to specific employees, generally through a written notice, Flanagan said.

To be eligible for an early out, CSRS and FERS employees must be:

  • At least age 50 with at least 20 years of government service.
    OR
  • Any age with at least 25 years of government service.

With Baby Boomers reaching retirement age, Flanagan said, “This is the first time that FERS employees in great numbers are becoming eligible for this if it is offered.”

Generally, employees who volunteer for early retirement also receive a $25,000 incentive payment, but agencies can decide to forego the bonus if they believe enough employees will retire, Flanagan said.

Another point to keep in mind – just because your agency offers an early out doesn’t mean you will get it, she said. Employees have a time frame to apply for the early out. If the agency receives more applications than the number of early out slots, the agency might limit the VERAs to a grade level or a department of the agency, she said.

However, with the flexibility of FERS employees to transition into private sector work, more feds might be thinking about leaving federal service early. These feds can still take with them their social security benefits, Thrift Savings Plan and lifetime health ebnefits.

On the other hand, if the fed does not have a second career lined up in the private sector, “It’s generally not enough money to live on,” she said.

Read Flanagan’s story in Government Executive.

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