đź’Ľ The Budget Shift That Could Quietly Push You into Early Retirement

But is leaving early the right move—or an expensive trap?

May 12, 2025

If you’ve been watching the latest federal budget proposals, one thing is clear:

👉 There’s a quiet, strategic nudge encouraging long-time federal employees to exit early.

Some agencies now have tools to offer early retirement incentives. Others are watching key benefits like pension multipliers and COLAs get quietly trimmed at the edges.

These proposals might make it easier to retire early—but they could also make retirement less secure.

⚖️ The Landscape Right Now

âś… VERA Expansion
Early retirement without penalty, if your agency is authorized under workforce reshaping efforts.

âś… VSIP Buyouts
Up to $25,000 lump-sum payments for those who voluntarily separate or retire early.

❌ Increased FERS Contributions
Future budget plans may raise employee contributions, reducing take-home pay.

❌ COLA Formula Changes
Some proposals would slow post-retirement inflation adjustments—especially painful for those retiring younger.

🧠 Before You Sign Anything: Ask These 3 Questions

  1. Am I financially ready for fewer working years—and more retirement years?
    Early retirement means fewer years of salary and savings… and more years drawing from your assets.

  2. How much smaller will my pension be—permanently?
    Leaving before age 62 or without 20 years of service? You lose the 10% FERS pension boost and get a lower multiplier.

  3. What’s my Plan B if the incentive isn’t enough?
    A $25K buyout feels big—until you calculate how much longer you’ll live without a paycheck.

âś… Your 5-Point Early Retirement Readiness Checklist

đź“Ś 1. Pull Your SF-50 and Verify Creditable Service
Make sure your official record reflects your full federal work history. Mistakes here can shrink your pension.

đź“Ś 2. Run a FERS Annuity Estimate With and Without Early Exit
Use OPM’s calculator or a reputable retirement planner to compare long-term outcomes.

đź“Ś 3. Calculate Your Retirement Income Gap
Compare projected pension + TSP + Social Security against your monthly expenses. A shortfall now compounds over time.

đź“Ś 4. Review Your TSP Withdrawal Strategy
Early retirement may require accessing your TSP before age 59½. Avoid the 10% penalty by timing it right or using age-55 separation rules.

đź“Ś 5. Get a Second Opinion
Have a qualified federal retirement expert or financial planner review your numbers. Don’t base a lifetime decision on a one-time offer.

🧾 Bottom Line

Retirement is forever. Incentives are not.

If you're being nudged out—or tempted to jump—it’s worth slowing down long enough to run the numbers.

Make sure the retirement you’re walking into is one you’ve designed—not one you’re reacting to.

Best,
Federal Wealth Retirement