Buyouts and Early Outs: Questions You Need to Ask

If you have an opportunity for an early out or a buyout, are you focused exclusively on not liking your current job? Here are questions you need to ask yourself before making a decision.

Now that the fiscal year 2008 budget has been approved and the dust from the annual game of chicken has settled,  we have some agencies who came out ahead and some who came out worse off than before in the money game. Agencies who ended up with less money are looking for ways to reduce their costs. This often includes offering early outs and/or buyouts. This does not mean that buyouts are “coming soon to an agency near you.” However, if they do, are you prepared to make a good decision?

Early outs and buyouts (VERAs and VSIPs to acronym fans) are normally offered for a limited period of time. The normal “window” of choice is open for only one to two months.

So, what should the average federal employee consider when looking at a potential buyout or early out? Obviously, the first thing is eligibility. If you have 20 years of service and are at least 50 years old, you are eligible. If you have 25 years of service, it does not matter how old you are – you are eligible.

Several other questions need to be asked as well.

  1. Can I afford to live on the amount I will get as an early out pension?
  2. How much in future pension benefits will I be giving up if I take an early out?
  3. If I cannot afford to live on my pension, what can I do to supplement my pension income?
  4. Do I have the skills needed to do whatever it is I need to do to bring in the extra income?
  5. Are there actual opportunities in my area where I can make enough money using the skills I now have?
  6. Is there any likelihood that I will return to government service within five years of accepting a buyout?

Too many people who accept an early out or buyout offer are focused on the fact that they don’t like where they are now. This is especially true if they don’t begin thinking about their choice until the window period is nearly over. They focus on the from part of the transition they will be making. Adequate time must be given to considering the to part of the equation.

You should begin to think of whether you want to take an early out or buyout long before it is offered. This will allow you to consider all of the pros and cons without feeling the pressure of having to make a decision before the offer of buyout or early out is withdrawn. With buyouts and early outs, as with other decisions we make in life, the more prepared we are and the more information we have – the better decision we will make.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at to discuss schedules and costs.

About the Author

John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.