Delivered on: Friday, March 26, 2021
Retiring Under an ‘Early Out’ Offer
Uncovering the opportunities (and the consequences) to leaving federal service under the VERA/VSIP
- PURPOSE: reviewing the Voluntary Early Retirement Authority (VERA) and the Voluntary Separation Incentive Pay (VSIP) programs
- ELIGIBILITY: identifying who can be eligible for the VERA and VSIP
- PENSION: highlighting the possible long-term effect on your federal pension
- OTHER BENEFITS: how benefits like SRS, SS, FEHB, FEGLI, and TSP are impacted by an ‘early out’ decision
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Prefer to read instead? Below is a transcript from the video:
Welcome to today’s FedImpact webinar on Retiring Under an Early Out Offer. This is a really timely webinar because there are some early outs sneaking around the government now, and tons of questions pouring into ProFeds on whether someone should take an early out, if it’s a good deal. And there’s so much complexity that goes with it. That’s a really hard answer to give succinctly. And so, today we’re going to dive into some of the details of this program to be able to set the record straight.
Our audience today, there are thousands of you registered. And so, we’re going to do our very best to cover as much information as we possibly can. Of course, we know each of you are coming armed with different types of questions. We do ask that any of those questions, you submit in the Q&A area for our support team to be able to help you. And please keep those questions specific to early outs and the effect of an early out on your other benefits.
We field a lot of questions in the Q&A, and we want to make sure to honor the questions that are coming in on this particular topic. So, we’re delighted to be able to help you do that today.
Handouts are available for download both in the handout section of the portal, as well as if you go to the very bottom of your screen, you’ll see a link to the handouts as well.
Today’s session is being recorded by us. We ask that there are no recordings privately or commercially of this program, but we are recording this for our replay. You will get an email with the link to the replay. So, if something happens in the middle of this session and you need a pop off, don’t worry, you’re going to get the link to listen to the rest.
Stay until the end of this webinar, because we’re going to do something today that we’ve never done on a webinar before. Because early outs typically come with a really short timeline and we want to be able to help you as quickly as possible. So, stay tuned for that.
Of course, I’ll be your ProFeds presenter today. I’m Chris Kowalik, the founder of ProFeds. And I’m really happy to be able to do these sessions with you today because we get to do a little bit deeper of a dive into topics that we don’t have time to cover like this in our normal workshops. Gosh, our workshops would be two weeks long, if we covered all of the things that were really important to the depth that they need to be covered! So, we break these sessions out to really hone in on particular topics that are most valuable to Feds, and frankly, the ones that we’re getting so many questions about.
Today’s session, like I mentioned, is Retiring Under an Early Out Offer, uncovering the opportunities, and of course, the consequences to leaving federal service, either under a VERA or a VSIP. And we’ll cover what those acronyms are, and who they apply to here shortly.
Our agenda today, we’re going to cover the two different tools that agencies can use to offer an early out and the basic eligibility requirements in order to get that. Now, one point of clarification that I feel I’m compelled to make here at the very beginning of the session, is that this is not an MRA+10 retirement, and this is not deferred retirement that we’re talking about. There will be some deferred elements that we’ll talk about, and I’ll point those out specifically. But today’s session is all about your agency offering you an opportunity to leave federal service earlier than you naturally would be able to. But it has to be offered by the agency.
In today’s session, we’re going to talk about the consequences, good and bad to taking the VERA and VSIP, and the effect that that decision has on other major benefits that you have, and certainly, the timeline of the big decisions that you need to make. Now, in order to do this, we’re going to review five case studies and assess the outcome of each of those to really get a sense of where the tipping point is for a lot of people, and how we help them to achieve the objective that they have using VERA and VSIP.
Before we jump into those case studies and the details of how these programs work, I’d love for you to answer a quick poll for us. So, you’ll see this pop up on the screen. Answer the question, are you currently considering an early out offer? Whether it’s VERA or VSIP, it doesn’t matter. But is that something you’re actively considering right now, that your agency has made an offer or you know one’s about ready to hit your desk, and you’re really trying to figure that out?
Now, for most of you, typically, folks that sign up for webinars like this, have something in hand and ready to go, but there may be a good number of you that just say, “Well, one’s not offered right now, but the next time it is, I want to be ready so I can pounce on it.” And that’s okay too. But we’d love to get an idea of the audience that we have here today. And you’ll be able to see the results of the polls as well. So, as soon as you answer, you’ll be able to see how everybody else falls out, not by name or anything, but just percentages of the entire audience.
Before we talk about retiring early, we have to talk about what retiring on time looks like. And by on time, I mean, being fully eligible to retire. So, what are the rules that the government has set out for each of the two retirement systems?
Now, for those of you who have already been to one of our workshops or come to some of our previous workshops or webinars, where we’re talking about MRA+10 and, and those types of things, you’ve probably seen this slide. Our CSRS employees, most of them, the vast majority, are already fully eligible, simply because that program has been around so long. But if you’re under CSRS, you would need to be age 62 with five years, at least age 60 with at least 20 years, or at least age 55 with at least 30 years. That would mean that you can walk out the door voluntarily without your agency offering anything to you. You have simply earned your pension and you met the rules in order to be able to go and draw that right away.
Under the FERS side, of course, they had to make things a little bit more complicated over here, it’s almost the same rules. So, 62 with five and 60 with 20, you see are exactly the same. But then the third option is, instead of 55 with 30, it’s now what’s called your Minimum Retirement Age. So, somewhere between 55 and 57, depending on the year that you were born.
On the right hand side, you would simply find the year in which you were born. You go to the right, and that is your Minimum Retirement Age. So, if you were born in 1960, your Minimum Retirement Age would be 56 for instance. So again, we have to start with this because this tells us what the normal mark in time is that you’re able to go, so that the rules of the early out make a little bit more sense and we have some context.
Let’s talk about the two rules that your agency has for workforce reduction. If an agency is trying to reduce its force in any capacity, there are two administrative tools that they have to be able to do this. The first is a VERA, that’s the Voluntary Early Retirement Authority. And it basically is some relaxed eligibility to be able to go. And we’ll talk about the specifics of that here in just a second.
The Voluntary Separation Incentive Payment, or the VSIP, is a cash incentive to go. So, those are the basic two tools. And their use is to incentivize employees who are not in a time limited position, like a term appointment or anything like that, but to incentivize employees to voluntarily leave service. Because what agencies really prefer to avoid is an involuntary reduction-in-force or a RIF. And so, under a RIF, the agency has to cut jobs of people who aren’t asking or willing to go, but this is an involuntary action. And it leaves a lot of people hurt in a lot of ways, financially. And so, what they try to do before they have to go to the RIF scenario, is to do an early out to incentivize the people who were maybe on the fence and just needed a little bit of a nudge to be able to go ahead and leave. But again, this is voluntary. Your agency can’t force you to take an early out. They can force you to leave under a RIF, but they can’t force you to take an early out under VERA or VSIP.
Now, there are restrictions. And we’re not going to go into all of the details on who qualifies for VERA and VSIP, or specifically, who’s disqualified for these, because the list is really long and we have 30 minutes today. And so, I want to get through as much of this as we can. But I encourage you to read through the rules when your agency makes the offer for the early out. Make sure you’re reviewing all of the considerations to ensure that you meet them.
Let’s start with the VERA. So, the VERA is basically relaxed eligibility rules that allow you to pick up an immediate pension earlier than what the full eligibility rules would allow, the ones we just reviewed. 62 with five, 60 with 20, MRA with 30. So, this allows you to retire earlier. In order to do so, you must meet the agent service requirements of the early out. And that is, you must be at least age 50 with at least 20 years of service, or any age with at least 25. And you must continuously be employed with that agency, typically, 30 days prior to when the agency had the VERA approval. So, why they’ve put this in there, I’m not entirely sure, but I suppose it’s to keep people from sneaking into agencies when they know a VERA is about ready to hit. But this is the basic rule for VERA.
The VSIP, remember this is the cash payment. For most agencies, it’s $25,000 as the maximum. The DOD is at $40,000. And essentially, this cash payment can either be added to the VERA, so, a VERA, VSIP can be offered together, which allows not only the cash to be paid, but a person gets their pension, too. Or this VSIP, this cash payment, can be used as a standalone buyout. And this could mean that someone only gets the cash and no pension, or they get cash and a pension later. It’s not immediate, but later they’re going to get a pension.
The basic requirements to qualify for the VSIP is you must have continually been employed by the federal government for at least three years. And know that the full amount of this cash payment is taxable. And if you return back to federal service within five years, you have to pay all of it back, not just the part you received, but all of it, pre-tax. You have to pay all of that money back before you can restart a federal position. So, don’t think you’re going to pull a fast one, retire, get this, and then come back to work for the federal government. They figured that that piece out.
Let’s talk about the effects of a VERA/VSIP on several of your benefits. So, we’re going to walk through each one of these step-by-step. So, let’s get started with the pension. Now, we have very, very few CSRS employees left in the government, in the grand scheme of how many of you there are out there.
Today I’m going to primarily focus on FERS because they’re really the targets of early outs, but I do want to cover CSRS, specifically, here under the pension. Under a VERA for CSRS employees, that pension is payable immediately. And it would simply be calculated under the normal pension rules, the normal formula at the time of the VERA of the offer. The reduction to a CSRS pension is 2% for every year they’re under the age of 55. Very, very, very few CSRS would ever meet this. Because again, that program has been around so long, and by virtue, their age has to be beyond 55 at this point. But I suppose there are just a handful of people that may qualify for this. So, I didn’t want to leave you out.
For FERS, of course, the primary audience that we have here today, this pension would be payable immediately to you. And the normal pension calculation would be taken at the time that the VERA is offered. Not what you were supposed to get later, but what the pension would be if you are eligible to retire today. And there is no reduction for FERS employees. So, that’s a great bonus for you to not have any penalty applied to your pension.
Now, let’s transition to the VSIP. So, if you have less than five years of creditable service, there is no pension payable to you at all. Not now, not later. You are not eligible because you were not vested in the retirement program. You still may be eligible for a VSIP to get the cash to leave, but beyond that, there’s nothing payable to you.
If we’re under the VSIP offer and you have at least five years of creditable service, if your CSRS, your pension would be deferred until you reach the age of 62. Again, normal pension calculation, but it’s reduced 2% for every year you’re under 55, the exact same rules as we saw under the VERA.
And under FERS, you would be eligible for a pension. It would be deferred. So, meaning you can’t draw it until a later date. And that later date is dependent on your age and service. So, it’s either going to be payable at 62, 60, or your Minimum Retirement Age, depending on how many years of service that you had. Again, refer back to that full eligibility table, where we showed 62 with five, 60 with 20, or MRA with 30. And as soon as you meet that age, based on the number of years you have, your pension may begin. Just know that this calculation is done at the time that the VSIP is offered, not at the time in which you draw the benefit. And so, if there’s many, many, many, many years before you’re going to be drawing it, the purchasing power of that money would have depleted or at least gone down because we’ve not kept pace with inflation.
We’ll see some calculations here shortly. But let’s talk about the next natural benefit that is affected by the early out, it’s the Survivor Benefit Plan. In normal eligibility rules, you’re able to designate your spouse to receive up to half of your pension. For CSRS is a little bit more. But for FERS, half of your pension, when you die, can be payable to your spouse.
If you retire under the VERA/VSIP, you’re still eligible to do that. As long as you’re eligible to receive a pension, you’re eligible to put your spouse on there to receive part of it. But you’re naturally going to have fewer years in your pension calculation, which causes it to be lower than if you waited until you were fully eligible, which simply means the natural by-product is that your spouse will receive a lower amount as well upon your death, because they’re starting with a lower number in your pension. So, this isn’t anything specific to the VERA/VSIP. It’s just a natural by-product of the fact that you’re taking a lower pension. And so, thereby your spouse is going to get a lower protection of the pension later.
Next step, we have the Federal Employee Benefits Program. So, in normal rules, in order to be able to keep the FEHB program, an employee must have been enrolled for five years immediately prior to their retirement and be in receipt of an immediate pension.
OPM has the ability and has granted pre-approval waivers to employees who have not met that five-year rule. But they had to have been covered under FEHB since the beginning date of the agency’s last statutory VSIP authority, or the OPM approved VSIP or VERA authority.
If you weren’t enrolled in FEHB, this is not your opportunity to do so. You already had to have been enrolled, but you didn’t quite meet that five-year rule. And you also have to either retire or separate under VERA/VSIP within that specified period that is being offered to you. And then at that point, the agency, based on the Benefits Administration Letter 04-208, the agency is simply allowed to grant a pre-approved waiver from OPM for the VERA/VSIP scenario. So, that’s a great perk. We’ll see how that plays out a little bit differently for VERA and VSIP a bit later when we get into the case studies.
Now, for FEGLI, in order to keep that life insurance, you have to be enrolled in that program for five years immediately prior to retiring and be in receipt of an immediate pension. So, this includes the basic coverage and any of the options that you wish to keep. But no waiver exists for meeting that five-year rule. So, you will not be able to keep that FEGLI coverage if you have not had it for at least five years prior to retiring.
For the Special Retirement Supplement, this is a program that provides a benefit similar to Social Security to employees under FERS, who retire prior to the age of 62. Now, the SRS is still payable to employees who take a VERA, but payments won’t begin until you’ve reached your Minimum Retirement Age, so somewhere between 55 and 57, depending on the year that you were born. So, it’s not that you don’t qualify for this Special Retirement Supplement, it’s just there might be a delay in when it’s actually payable to you. We’ll see that in the case studies here in a moment.
Next step. We’ve got the Social Security program. So, there’s no direct effect on Social Security for someone taking early out. But the indirect effect is that if you don’t continue to work to contribute to Social Security, you might not get what’s on your statement. That benefit might be lower than what your statement is projecting, because if you read the fine print of the Social Security statement, it’s assuming that you’re continuing to work until those ages in which you’re drawing. So, really important that you understand that there is an indirect effect on Social Security but not a direct one for VERA.
The Thrift Savings Plan. You can only contribute to TSP while you’re employed. So, once you stop working, you can’t pour any more money into it. And I know so many of you love TSP, just know that you can’t put anything more in. If you retire or separate earlier than you expected, you naturally have fewer years to contribute to TSP. So, that bucket won’t be quite as big. And a natural by-product is that if you’re not going out and getting another job, but now you’re actually retired, you may tend to rely more heavily on TSP, on that account to support you for a longer period of time in retirement and probably longer than you originally expected. So, you’ll see that play out for a couple of our cases a little bit later. But definitely TSP, I know is a big deal.
But there’s a second part of TSP that’s really, really important for you to know. And that is for Feds, either retiring or separating from service in the year in which they turned 55 or older, they have penalty free access to TSP funds without penalty. Normally, when you take money from retirement accounts like IRAs and 401(k)s, if you take it prior to 59 and a half, there’s a penalty. But you don’t have a penalty as long as you retire or separate in the year in which you turn 55 or older. Now, of course, taxes are still due, but you don’t have the 10% early withdrawal penalty. If you retire prior to this age, so let’s say you’re 53, so that we’re sure it’s not the calendar year in which you turn 55, you’re 53, any money that you take from the TSP prior to that age, all the way to 59 and a half, will receive the 10% early withdrawal penalty.
Now, there are some ways to avoid this in the TSP, but it is super restrictive on the way in which you can get your money, which most people don’t love. So, there are ways around this. It just might not be as advantageous as the normal access to this money. And I’ve got a special little note here. We likely don’t have many law enforcement, firefighters or air traffic controllers on the line today because they already get to retire earlier than normal. But your age in this scenario is 50 instead of 55. So, we’ll just make that clarification for everybody today.
Let’s talk about our case studies. For the scenarios we’re going to cover, we’re going to show employees at different ages and different service years throughout their career. We’re going to assume that they’re all under the FERS program, because again, that’s who’s normally being targeted for early outs at this time. We’re going to assume that all of them have a salary of a hundred thousand dollars a year, just because it’s some easy math. And that puts their high-3 at $98,000, at least in our example, so we can show you some comparisons.
And we’re also going to assume that each of them have an expected Social Security benefit at the age of 62 of $1,200 per month. A very reasonable number. Many would be higher than this, but a very reasonable number for us to use in our example.
The two offers that we’re going to review are VERA, so just relaxed eligibility for people that meet the requirements and be able to retire and draw their pension. And we’ll also discuss the VSIP. And we’re going to assume that that is $25,000.
Our first case study will be on the VSIP. So, we’re going to be looking at some younger employees in this mix. We have Aaron and Carolyn. They have similar situations, but different enough that we have some different outcomes.
For Aaron, he’s in his late twenties and he has just four years of service. Carolyn, too, is in her late twenties, but she has five years of service. And that specific difference of the number of years of service is really going to make a difference for Carolyn.
Let’s compare Aaron and Carolyn’s scenarios. So, both of them are simply ready to leave the government. Aaron says, “Hey, this isn’t quite what I thought it was going to be. I just want to go out to the private sector and do something different.” Carolyn, she’s ready to leave the government too, but she wants to go start her own business. And so, she’s like, “Hey, I don’t want to wait until I’m fully eligible. I want to go do it now.”
From a pension standpoint, Aaron will not be eligible for a pension because he only has four years of service, and the vesting schedule is five. And so, he’s going to walk out. He’ll have his $25,000 from the VSIP, but that’s it.
Carolyn, on the other hand, in addition to the $25,000 in cash that she’ll receive, she is eligible for a pension. It’s not a super large pension. But beginning at the age of 62, her pension would be $4,900 per year. So, it’s something. And what a difference one year of service makes in this example! Now, at the same time that able to draw her pension, she’s able to name a Survivor Benefit. That would be her spouse, assuming she’s married at that time. That again at 62 would kick in. And if she were to pass at that time, her spouse would receive $2,450 per year. And both of those are adjusted by COLAs after they begin. But between 28, when she leaves service, and 62, there’s no adjustment. There’s no inflation or cost of living adjustment applied to this money. So while, almost five grand sounds like a nice little amount of money now per year, it won’t really feel that same way at 62. But it’s something. And again, what a difference one year of service really makes.
The next three programs that we need to review are the health benefits, life insurance and long-term care. So, both Aaron and Carolyn will get to keep their FEHB coverage. This is something really surprising that the government has done, because these folks were nowhere near drawing an immediate pension normally by the normal standards, but it was a super big incentive to allow them to keep their FEHB. Of course, they had to have been enrolled and the pre-approved waiver is implemented and all of that, but they had to have already been enrolled in the FEHB plan for that duration that the agency requires. Not the five years, but from the last time that they had the VSIP authority.
With FEGLI, neither Aaron, or Carolyn are eligible for the FEGLI coverage. It will terminate. They’ll have a 31 day extension. That will be it. The only other option that they’ll have is to convert it to a private policy. But there are several restrictions on the conversion rules and what companies are allowed.
Now, for the Long Term Care, they’re eligible to keep as long as their eligibility for FEHB is active. So, an interesting little rule. But most of the time, a 28 year old doesn’t have long-term care insurance to begin with. We’re lucky to get 58 year olds to get long-term care insurance to cover themselves. So, this is typically not an issue for most of these younger folks.
Next up is the Social Security program. Now, both Aaron and Carolyn would be eligible at the age of 62, like they normally would have. And their benefit at that time is largely going to be dependent on work they’ve done outside of the government. They’re going to need to go work somewhere from 28 to probably late fifties, early sixties. And that’s the pay that’s really going to determine the benefit that they will have at 62.
Neither one of these folks is going to be eligible for the Special Retirement Supplement. If you remember, that’s the program that looks a lot like Social Security, but it’s paid prior to 62. They are not eligible for that.
As far as the Thrift Savings Plan, neither of these two folks would be allowed to contribute more money to the TSP. They are allowed to take money out of the TSP after they’ve separated, but each of them will have penalties.
So, the only real difference between Aaron and Carolyn’s situation is that Carolyn is eligible for a pension and Aaron is not. Everything else is exactly the same between these two employees.
Now, we don’t normally have a lot of super young folks being offered the VSIP. The government is most often interested in getting rid of higher paid employees that have been with the government for a much longer period of time and carry a little heftier of the payroll burden. And so, again, unusual to have folks this young getting the VSIP, but certainly a possibility.
For Aaron, let’s look at the final outcome. He’s really torn. He wants to leave the government. He’s really glad that he’ll be able to keep that FEHB coverage, but he’s also jealous that Carolyn gets a pension later. And he’s wondering like, “Wow, gosh, should I just stick around for at least another year? And maybe I’ll take the next early out that’s offered.” The next VSIP that’s offered.
His hesitation in doing so, is he heard there’s a RIF that’s possible in his agency, because they really need to get rid of a lot of people. And he knows that if he passes up the VSIP of the $25,000 and a RIF comes around and he’s involuntarily separated, the only thing he’s going to get as a severance package. He’s not going to get this $25,000 incentive. So he’s really torn and he has a big decision to make, and one that based on everything we talked about, he’ll need to make the decision that’s best for him.
Now, Carolyn, on the other hand, she’s thrilled. She was ready to leave anyway. But what was a nice perk it was to hear that she’s going to have a pension later. Even though it’s a lot less than a normal pension, she’s thrilled that she’s going to have it. And because she’s going out and starting her own business, she says, “I’m happy to have $25,000 to get started.” And so, two people, and almost identical scenarios, but very different outcomes for them as far as their outlook on what things really look like.
Our next group of people that we’re going to do our case study on are folks that are much closer to retirement. So, they’ve been offered the VERA and the VSIP. So, they are each in relatively different scenarios.
So, Nancy, we have here, she’s already fully eligible and was planning to retire anyway. And so, this might just be a big perk for her. Shawn, on the other hand, he’s close to being fully eligible, but really anxious to retire. Things at work maybe aren’t so awesome. And he said, “You know what? If I had the chance, I’d probably just go and really retire.” And this might be his chance.
And then Jackie, she’s younger. She’s the youngest of the three. And she just doesn’t want to stay in government service anymore. She’s had enough. She wants to move on and do something different. So, let’s compare these three individuals as well.
The scenario for Nancy, remember, she wants to plan to retire, anyways. Shawn is just shy of being fully eligible. And Jackie wants to pursue her second career.
From a pension standpoint, Nancy is already eligible. She was actually planning on putting her retirement paperwork in, anyway. And then the VERA/VSIP came out. And so, she’s like, “Well, gosh, I don’t really need the VERA. I’m already qualified for a pension. But sure, it’d be nice to take the extra 25 grand.” So, her pension at that time, given her high-3 of $98,000 and the number of years of service, and the pension calculation would come out to almost $40,000 per year.
Shawn, on the other hand, would not have been eligible for a pension until the age of 57, had it not been for the VERA offer. And so, his pension if calculated right now at the time of the offer, it’s going to be $31,000 a year. Jackie, same thing. She would not have been eligible until 57. And we’d be looking at $24,500 a year for Jackie.
From a Survivor Benefit standpoint, again, they’re still eligible for survivor benefits. It’s just going to be lower than had they stuck around to be fully eligible.
Next up is the health benefits, life insurance and long-term care. Easiest slide I get to teach all day. All three of these individuals are eligible to keep all of these programs. Great perk.
Next up is Social Security. So, for Nancy, she’s eligible to retire right away. And she’s already 62. So, she’s eligible for Social Security right away as well. She doesn’t have to take it immediately. She could wait for a higher payout from Social Security, but she’s eligible to do it now. Shawn, on the other hand would not be eligible until the age of 62. And Jackie same thing.
The flip side of that is Nancy is not eligible for the Special Retirement Supplement, but both Shawn and Jackie are. Now, the dollar amount that they’re going to receive will be different. Shawn would be eligible for $11,520 per year. Again, we’re making some assumptions based on the length of service and the Social Security benefit that he’s expected to receive at 62 to come up with this number. But Jackie, on the other hand, would only be eligible for about $9,000 per year.
The key is for Shawn and Jackie, for the Special Retirement Supplement is they will not be able to begin drawing that benefit until they’ve reached their Minimum Retirement Age. So Shawn is 55 now. He’s going to have to wait almost a year and a half to begin those payments. Until he reaches 56 years and four months old. Jackie will need to wait from the age of 48 all the way until 57 for that $9,000 a year to begin.
For TSP, almost the same for everybody. Of course, nobody is allowed to contribute any additional money into the TSP. And they can all take money out of the TSP. But Nancy and Shawn have the ability to take money out with no penalty. The reason being is they were at least age 55 in the year in which they retire. And so, they’re able to take advantage of that special rule. But Jackie was only 48, and so she didn’t meet that requirement. So, any money that Jackie takes out of TSP will be penalized, the 10% early withdrawal penalty from the IRS, all the way until 59 and a half.
Let’s just do a side by side comparison. For Nancy taking the VERA/VSIP, really the VSIP portion is a no- brainer. She’s thrilled that she got an extra 25 grand for doing what she was planning to do anyways. She was going to retire. And this just happened to fall right in line with her desire to retire. And so, she made it happen. So, total no-brainer for Nancy to do this.
Now, Shawn, his big thing was, he simply wanted to stop working. And it would be great if he was able to retire. And remember, he said, “If it were up to me, I would go ahead and retire right now.” Well, the VERA is basically giving him that opportunity. So, he’s happy that he’s free. He doesn’t have to go back to work. His primary objective was to stop working. And he realized that it would cause him to get a slightly lower pension than what he naturally would have with having a few more years under his belt in the calculation. But he’s really happy to be done working and moving on to maybe some hobbies or other things that he planned to do in retirement.
For Jackie, she’s happy too, but she’s working. Her whole plan was to go out and start a new business. And so, she’s pursuing that work out in the private sector. And she knows that without the VERA, she wouldn’t have qualified for an immediate pension. And so, not only did she get her 25 grand to pump into her new business, she also is beginning to receive an immediate pension right now. And what a great opportunity that really is for her.
Something to think about, everybody wants to ask us, “Well, should I do this? Should I take the VERA? Should I wait until I’m fully eligible?” And math is part of the equation of figuring out, does the math work as far as the income that you’re going to have? But the other part is the freedom. And the freedom to go on and do the other things that you plan to do, other than working for the federal government.
So, here’s the part of the session that we’re going to do what we’ve not done in any of our webinars previously. And that is, when these offers are made, there’s typically a very short timeline to accept an offer. And so, what we normally do in our webinars, is we tell folks, “Listen, you need to get the rest of the story. You need to come to one of our retirement workshops where we cover all of these benefits in much greater detail. And that way, you can see the big impact of the decisions that you’re making.” But for people that are going out under an early out scenario or considering one, they don’t have that luxury of waiting for a workshop in their area to happen.
Here’s what we’re going to do. There’s going to be a poll that pops up and it asks, “Would you like a one-on-one consultation to discuss your early out decisions?” If you do, simply answer yes. If you want to pass, that’s okay. We just want to make it super easy for you to get clear on the decision that you’re about ready to make. And it’s not to take anything away from our workshops. We want you to go to those as well. But at the end of the day, if you have a really short window, and a workshop isn’t available in your area for two or three months, that will be too late.
This will give you an opportunity to meet with one of our local partners, to be able to develop a benefits report, get very clear on the early out decisions that you’re going to have, and look at the big picture of what it is that you’re doing to make sure that this is the right move for you.
So again, answer that poll. We’ll be delighted to link you up. Give us a few days to get you paired up with a local person to be able to help you.
Now, keep in mind those meetings now can take place virtually, they can take in person, really, whatever you’re comfortable with. They’ll need a little bit of information from you to be able to get that report started and really discuss the early out decisions that you have. But that will be a great opportunity for you to be able to get a little personal love on all of this and make certain that you’re not making a decision without considering all of the consequences.
Of course, if you have the time, we want you to get the rest of the story. I cannot encourage folks enough to attend one of our full retirement workshops. These are full day sessions. We have virtual and live options. Live options are coming back. We’re excited to be able to do that. There’s no cost to attend these sessions. And we cover all of the benefits topics in, of course, much greater detail than we were able to do today.
In order to see the details of the workshops available, please visit fedimpact.com/attend. You’ll see that link right at the bottom of your webinar screen as well to be able to link directly to it.
The handouts and the replay, like I promised, you we’ll get the handouts and the replay. So, if you haven’t already downloaded the handouts, you can either do so quickly before we end the webinar or a link will be emailed to you as well. So, you’ll be able to have those, if there were some, especially a couple of slides that you tried to feverishly jot down, don’t worry, we’ll get you the handouts. And the replay will accompany those handouts as well.
Our next webinar is on Breaking Down Military Service Buybacks. This is a question that we get so often, “Should I buyback my military service?” And although it doesn’t have a direct connection to the early outs, this is our next session that I think everyone who has spent time in the military can certainly benefit from. This would be true if you had active duty service, reserve service, or if you attended one of the military service academies. Very, very important that you understand how to leverage that military time in your federal pension, perhaps to help you to be eligible to retire sooner, or simply increase the pension that you’ll be entitled to. So, to be able to sign up for that webinar, just like you did for this one, you’ll go to fedimpact.com/webinar and mark it on your calendar for April 29th at 1:00 PM central.
All right, guys, we are all done with today’s webinar. Thanks so much for sticking around. I know we went a little bit over our 30 minute time. But boy, so much to cover for the VERA/VSIP! I hope that if you are considering taking an offer from your agency, that you get super, super clear on your numbers before you walk out the door and sign that document. Again, you can indicate to us right in that poll section that you would like to be able to meet and develop that benefits report to begin to talk about those early out options, so that we can help you out.
Thank you all so much. Have a wonderful day. And again, thanks for joining us.
Register for our next 30-minute webinar: FedImpact.com/webinar
Find a comprehensive retirement workshop for your area: FedImpact.com/attend