VERA & VSIP Guide 2026: Should You Take the Early Retirement Offer?

Last Updated: January 9, 2026 Reading Time: 10 min

Your agency just offered a buyout. Should you take it?

With DOGE-driven workforce reductions continuing into 2026, more federal employees are facing this question. SSA, DOD, Commerce, Interior, and other agencies have offered or are offering VERA/VSIP packages. If voluntary separations fall short, RIFs may follow.

Key Takeaways

• VERA and VSIP are separate programs. You can receive one, both, or neither.
• VERA = early retirement without penalty. Qualify at age 50 with 20 years, or any age with 25 years.
• VSIP = cash buyout up to $25,000. After taxes, expect $17,000-$19,000.
• No FERS penalty under VERA. Unlike MRA+10, there's no 5% per year reduction.
• FEHB 5-year rule applies. You must have been enrolled for 5 years to keep health insurance.
• Returning to federal service within 5 years? You must repay the entire gross VSIP amount.

What Are VERA and VSIP?

These are two separate programs often offered together, but they don't have to be.

Program	What It Is	Key Benefit
VERA	Voluntary Early Retirement Authority	Retire early with no penalty (if FERS)
VSIP	Voluntary Separation Incentive Payment	Up to $25,000 cash buyout

VERA: Early Retirement Without the Penalty

Normally, FERS employees need to meet specific age and service requirements to retire with an unreduced pension. VERA lowers those requirements.

VERA Requirement	Standard
Age 50 + 20 years of service	OR
Any age + 25 years of service	(at least 5 years civilian)

The key advantage: No annuity reduction for FERS employees, even if you're under 55.

Compare this to MRA+10 retirement, which imposes a 5% penalty for each year under age 62. That penalty can be devastating.

VSIP: The Cash Incentive

VSIP is a lump-sum payment to encourage voluntary separation.

• Maximum: $25,000 (or $40,000 for DOD)
• After taxes: Expect approximately $17,000-$19,000
• Repayment: Must repay full gross amount if you return to federal service within 5 years
• No retirement required: You can resign (without retiring) and still receive VSIP

2026 Context: Why Agencies Are Offering These Now

The Department of Government Efficiency (DOGE) workforce reduction initiative is driving VERA/VSIP offers across agencies.

Agency	Status	Notes
SSA	Active	7,000 employee reduction target; RIF possible if not met
DOD/DHA	Active	$40K VSIP; 5-8% civilian workforce reduction
Interior	Closed	Applications closed March 2025
Commerce	Closed	Applications closed April 2025
HHS	Closed	Applications closed March 2025

What to watch: If voluntary separation targets aren't met, agencies may proceed to Reduction in Force (RIF). Understanding VERA/VSIP now could help you make a proactive decision.

Eligibility Requirements

VERA Eligibility

Requirement	Details
Age + Service	50 + 20 years, OR any age + 25 years
Civilian service	At least 5 years must be civilian
Agency approval	Your agency must have OPM-approved VERA authority
Position	You must be in a position covered by the VERA window
Timing	Must retire during the authorized window

VSIP Eligibility

Requirement	Details
Service	3+ years continuous federal employment
Position	Must be in a covered position/organization
Timing	Must separate during the authorized window
Retirement	NOT required. You can resign without retiring.

How VERA/VSIP Affects Your Benefits

Pension (FERS Annuity)

Factor	Under VERA
Calculation	Same formula: 1% × High-3 × Years (or 1.1% if 62+ with 20 years)
Penalty	NONE for FERS (major advantage over MRA+10)
COLAs	Don't begin until age 62
Sick leave credit	Yes, unused sick leave counts toward service

Use our FERS Retirement Calculator to estimate your annuity under VERA vs. waiting for regular retirement.

FERS Supplement

This is where VERA gets tricky.

The FERS Special Retirement Supplement bridges the gap between retirement and Social Security at 62. But under VERA:

• If you retire before your MRA: You must wait until MRA to receive the supplement
• Example: Retire at 49, MRA is 57 = wait 8 years for supplement to begin
• Earnings test: If you work, earnings above approximately $23,400 reduce your supplement by $1 for every $2 over

Your MRA (Minimum Retirement Age)

Birth Year	MRA
Before 1948	55
1948-1952	55 + months
1953-1964	56
1965-1969	56 + months
1970+	57

FEHB (Health Insurance)

To keep FEHB coverage in retirement, you must meet the 5-year rule:

• Enrolled in FEHB for the 5 years immediately before retirement
• Exception: OPM grants waivers if you've been continuously enrolled since your agency's VERA was approved

Warning: If you've had gaps in coverage or were on a spouse's plan, verify your eligibility before accepting.

TSP Access

Your Age at Separation	TSP Penalty Status
55 or older (in year of separation)	No 10% penalty
Under 55	10% penalty until age 59.5

If you retire under VERA before 55, you'll face the early withdrawal penalty if you need TSP funds. Consider whether you can bridge the income gap without touching TSP.

The Math: Is It Worth It?

Here's a framework for evaluating a VERA/VSIP offer.

Quick Calculation

1. Current pension estimate (use our FERS Calculator)
2. Pension if you wait 3-5 more years
3. Monthly difference × 12 months × expected retirement years
4. Compare to net VSIP (approximately $17-19K)

Example:

• Current VERA pension: $2,500/month
• Pension if wait 3 years: $3,000/month
• Difference: $500/month × 12 = $6,000/year
• Over 25 years: $150,000 in lost pension
• Net VSIP: approximately $18,000

In this example, the VSIP doesn't come close to offsetting the pension difference.

Decision Checklist

Before accepting VERA/VSIP, answer these questions:

Financial Readiness

• Can I cover expenses until Social Security at 62?
• Can I cover expenses without FERS Supplement until MRA?
• Do I have 6+ months emergency fund?
• Is my TSP large enough to bridge any income gaps?

Benefits Check

• Do I meet the FEHB 5-year rule?
• Am I 55+ (or will be in separation year) for TSP access?
• Have I requested an official annuity estimate from HR?

Future Plans

• Am I certain I won't return to federal service within 5 years? (VSIP repayment)
• Do I have post-retirement income plans (without exceeding FERS Supplement earnings limit)?

Common Mistakes to Avoid

1. Overestimating the VSIP

The trap: Thinking you're getting $25,000.

Reality: After taxes, expect $17,000-$19,000.

2. Ignoring the No-COLA Period

Retiring at 50 under VERA means 12 years without inflation adjustments. A $2,500/month pension in 2026 buys significantly less by 2038.

3. Failing the FEHB 5-Year Rule

Losing health insurance in retirement is catastrophic. Verify your continuous enrollment before accepting.

4. Planning to Return

The 5-year VSIP repayment rule is strict. If there's any chance you'll return to federal service, even as a contractor working for the government, don't take the VSIP.

5. Missing the Window

VERA/VSIP deadlines are firm. If your agency offers a 30-day window, there are usually no extensions. Start your analysis immediately.

6. Not Getting a Personalized Estimate

Our calculators provide estimates, but for the actual decision, request an official annuity estimate from your HR office. Your high-3, sick leave credit, and service computation date matter.

VERA vs. Other Retirement Options

Option	Age/Service	Penalty	FERS Supplement	Best For
VERA	50+20 or 25 any age	None (FERS)	At MRA	Buyout opportunity
MRA+30	MRA + 30 years	None	Immediately	Long-career employees
60+20	60 + 20 years	None	Immediately	Standard path
62+5	62 + 5 years	None	N/A (SS eligible)	Shortest service
MRA+10	MRA + 10 years	5%/year under 62	Only if not reduced	Leaving early

VERA's advantage is no penalty at lower thresholds than MRA+10. If you're considering leaving anyway, VERA is almost always better than MRA+10.

Calculate Your Retirement

Use our free FERS Retirement Calculator to estimate your pension under VERA vs. waiting. See exactly how much you'd receive monthly and annually.

Calculate Your FERS Annuity →

Frequently Asked Questions

What is the difference between VERA and VSIP?

VERA (Voluntary Early Retirement Authority) lowers retirement eligibility to age 50 with 20 years of service, or any age with 25 years. VSIP (Voluntary Separation Incentive Payment) is a cash buyout of up to $25,000. They are separate programs. You can receive one, both, or neither depending on your agency's offer.

Is there a penalty for retiring early under VERA?

For FERS employees, there is NO annuity reduction penalty for retiring under VERA, even if you are under age 55. This is a key advantage over MRA+10 retirement, which imposes a 5% reduction for each year under age 62.

Can I keep my FEHB health insurance if I take VERA?

Yes, but you must have been enrolled in FEHB for the 5 years immediately before retirement. If enrolled for less than 5 years, you may qualify if continuously enrolled since your agency's VERA was approved. OPM grants waivers in these cases.

When do I get my FERS Supplement if I retire under VERA?

If you retire under VERA before reaching your Minimum Retirement Age (MRA), you must wait until you reach your MRA (ages 55-57) for the supplement to begin. For example, retiring at 49 with an MRA of 57 means waiting 8 years.

How much will I actually receive from a VSIP after taxes?

The VSIP is fully taxable. While the maximum is $25,000 (or $40,000 for DOD), after taxes most employees receive approximately $17,000-$19,000 depending on their tax bracket.

Next Steps

If your agency is offering VERA/VSIP:

1. Get the official offer details from HR, including deadlines, amounts, and eligibility
2. Request a personalized annuity estimate from your servicing personnel office
3. Run the numbers using our FERS Retirement Calculator and High-3 Calculator
4. Verify FEHB eligibility with your benefits office
5. Consider the alternatives: if you don't take it and RIF follows, compare VSIP to severance pay
6. Make your decision before the window closes

The Bottom Line

VERA/VSIP can be a good deal, but only if you run the numbers first.

The $25K buyout sounds attractive until you realize it nets $17-19K after taxes and may not offset decades of reduced pension. The lack of penalty under VERA is valuable, but not if you're leaving income on the table by retiring too early.

Crunch the numbers. Verify your benefits eligibility. And make the decision that's right for your situation, not because an offer is on the table.

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Related Resources

• FERS Retirement Calculator: Estimate your pension under VERA vs. waiting
• High-3 Calculator: Calculate your high-3 average salary
• Severance Calculator: Compare VSIP to RIF severance pay

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Sources: OPM VERA Authority, OPM VSIP, Federal News Network, Commerce VERA/VSIP FAQ