VERA/VSIP Buyout Decision Calculator (2026)
If your agency has offered a Voluntary Early Retirement Authority (VERA) window or a Voluntary Separation Incentive Payment (VSIP), you are facing one of the most consequential and time-pressured financial decisions of your career. Decision windows are typically 30–60 days, the math is non-obvious, and there is no undo. This calculator shows your FERS annuity if you retire now versus waiting 1, 2, or 3 years, the estimated net value of your VSIP after federal withholding, how many years of your pension increase the VSIP is worth, and whether key benefits — FEHB, the FERS supplement, and TSP penalty-free access — follow you into retirement.
Designed for FERS employees. CSRS annuity is shown using the tiered formula (1.5%/1.75%/2%) — CSRS employees do not receive a FERS supplement. Survivor annuity election (reduces annuity by 10% for 50% survivor or 5% for 25% survivor) is not modeled — run the Survivor Annuity Calculator separately.
What changes when you retire under VERA
The most important fact about VERA: there is no annuity reduction penalty. Under the normal MRA+10 early retirement option, you lose 5% of your annuity for every year you are under age 62 — a 50% cut for a 52-year-old. VERA eliminates this penalty entirely. Your annuity is calculated the same way as any standard FERS retirement.1
What does change:
- You stop earning FERS service credit. Every additional year of service adds 1% (or 1.1% at 62 with 20+ years) of your high-3 to your permanent pension. That gain is foregone when you retire — which is the real cost of accepting VERA.
- Your high-3 salary freezes. If you have a step increase or promotion coming in the next 1–3 years, those salary gains won't be reflected in your pension. This is a compounding effect — a $3,000/year salary increase raises your high-3 by roughly $1,000 (it takes 3 years to fully roll into the high-3 average), which adds $10–$11/year to your pension indefinitely.
- You stop contributing to TSP and receiving agency match. FERS employees in the FRAE tier (hired 2014+) contribute 4.4% of salary; the agency matches 4% on the first 5%. For a $130,000 salary that's $5,720/year in agency match you stop receiving. VERA acceptors who expect strong post-retirement investment returns can partially offset this — but it's real foregone money.
What does NOT change under VERA
Several critical items are unchanged by VERA vs. regular retirement:
- FEHB continuity. If you meet the 5-year rule, FEHB follows you into retirement at the same rates and coverage as active employees, paid from your annuity. This is one of the most valuable benefits in the federal package — private health insurance for a mid-50s couple typically costs $18,000–$30,000/year. VERA does not require a special FEHB continuity rule beyond the standard 5-year rule.
- FERS supplement eligibility. If you are at or above your MRA and have at least 20 years of creditable service, the FERS supplement starts when your retirement begins and continues until age 62. If you are below MRA when you retire under VERA, the supplement is deferred until you reach MRA. The supplement amount is SS-at-62 × (FERS years ÷ 40) — use the FERS Supplement Calculator for your estimate.
- TSP ownership. Your TSP balance remains yours regardless of when you leave. What changes: the Rule of 55 (penalty-free withdrawals if you separate at 55+) only applies if you are 55 or older when you separate. If you're 52 when accepting VERA, you must wait until 59½ for penalty-free access — or set up 72(t) substantially equal periodic payments.
- FEGLI. Life insurance continues into retirement under the 5-year rule (same as FEHB — continuous enrollment for 5 years before retirement).
- Sick leave credit. Unused sick leave converts to additional service credit at retirement (174 hours = 1 month) even under VERA. This can meaningfully close a gap — someone with 18 months of sick leave effectively has 1.5 more years of service credit applied to their annuity. Sick leave months cannot push you into VERA eligibility (they don't count toward the 20- or 25-year service thresholds) but they do add to the annuity calculation.
How to interpret the break-even
The break-even in this calculator answers a specific question: If I work one more year instead of taking VERA, how many years of retirement does it take before my additional annual pension equals the VSIP payment I'm passing up?
It does not include the salary income you'd earn by working that year (which is also significant), so it is a conservative measure — weighted toward making VERA look better than it might be in a full analysis. A complete picture requires comparing:
- Option A: Take VERA now. Receive VSIP net + annuity_now/year for the rest of your retirement.
- Option B: Work 1 more year. Receive salary (net of taxes and FERS contributions) + higher annuity for the rest of your retirement.
For most full-career federal employees in the $100,000–$180,000 salary range, working 1 additional year generates $40,000–$80,000 in after-tax salary plus $1,000–$1,800/year in permanent additional pension. The $25,000 VSIP typically covers a fraction of that combined value — which is why accepting VERA primarily makes sense when you have a concrete plan for your time and income after leaving: a private-sector role, a business, a caregiving situation, or a deliberate lifestyle choice.
| If your main reason is... | VERA/VSIP considerations |
|---|---|
| You have a private-sector job offer | Often makes sense — post-retirement income replaces the salary year; pension comparison becomes the key variable |
| Work stress / desire to stop | Can make sense — but model the monthly income carefully; many people underestimate the OPM interim pay gap in the first 2–3 months |
| Health concerns | Shorter expected retirement duration changes the break-even math significantly — earlier collection is more valuable |
| You don't have a clear income plan | Be cautious — see the First Year of Federal Retirement guide for the cash flow reality |
Related tools and guides
- VERA & VSIP Decision Guide 2026 — full eligibility rules, annuity math, FERS supplement deferral, VSIP tax treatment, and the break-even framework in detail.
- FERS Retirement Calculator — integrated annuity + FERS supplement + TSP + Social Security income model for any retirement date.
- FERS Supplement Calculator — exact supplement amount using your estimated SS benefit at 62 and service years, including earnings test analysis.
- Federal Retirement Eligibility Calculator — see every retirement option (MRA+30, 60+20, 62+5, MRA+10, LEO/FF) with the exact calendar date each becomes available.
- When to Retire from the Federal Government — all six retirement timing variables together: annual leave lump sum, high-3 optimization, sick leave strategy, FEHB, supplement, TSP Rule of 55.
- Survivor Annuity vs. Life Insurance Calculator — model the cost of your survivor annuity election against the equivalent term life insurance policy.
Get your VERA/VSIP scenario modeled
The calculator gives you directional numbers. What it can't model: the interaction between your VERA retirement date and your specific high-3 window, sick leave balance optimization, VSIP tax impact in your state, TSP withdrawal sequencing from your current balance, and Social Security timing combined with the FERS supplement cliff at 62. A federal benefits specialist runs the integrated model — calibrated to your exact situation, not an approximation.
- OPM — Voluntary Early Retirement Authority (opm.gov). VERA eligibility criteria: age 50 with 20 years of creditable service, or any age with 25 years. Under VERA, there is no annuity reduction penalty; the annuity formula is the same as under a standard immediate FERS retirement (5 U.S.C. § 8414(b)). Agencies must receive OPM authorization before offering VERA; employees must be in covered positions for the minimum period specified. Verified June 2026.
- OPM — Voluntary Separation Incentive Payments (opm.gov). VSIP cap: $25,000 under 5 U.S.C. § 3523(b)(3)(B). VSIP is treated as ordinary income; federal income tax is withheld at the supplemental rate (22% in 2026 per IRS Rev. Proc. 2025-67). State income taxes vary. VSIP does not affect the FERS annuity calculation. Verified June 2026.
- OPM — FERS Annuity Computation (opm.gov). FERS multiplier: 1.0% per year of creditable service (5 U.S.C. § 8415(a)); 1.1% if retiring at age 62 or older with 20 or more years of creditable service. The enhanced 1.1% rate applies to all service years, not just the service above 20 years. Sick leave credit is excluded from the 20-year threshold under § 8415(f). Verified June 2026.
- OPM — FERS Special Retirement Supplement (opm.gov). FERS supplement eligibility: immediate retirement with at least 20 years of creditable service and at or above MRA, or retirement at age 60/62+ with appropriate service. Under VERA at or above MRA, supplement starts at retirement date. Under VERA below MRA, supplement is deferred until MRA. Supplement ends at age 62 regardless of whether the retiree files for Social Security. 2026 earnings test threshold: $24,480. Verified June 2026.
VERA eligibility criteria and annuity formula verified against OPM VERA page and 5 U.S.C. § 8414(b). VSIP cap ($25,000) verified against 5 U.S.C. § 3523(b)(3)(B) and OPM VSIP page. Federal supplemental withholding rate (22%) verified against IRS Rev. Proc. 2025-67. CSRS tiered formula (1.5%/1.75%/2%) verified against OPM CSRS computation rules (5 U.S.C. § 8339). MRA table per 5 U.S.C. § 8412(h). Calculator uses current-year inputs as approximations; OPM official numbers should be confirmed with your HR office before making a final decision. Confirmed June 2026.