When is the Best Date to Take SSA’s Early Out Retirement Offer?

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By on April 10, 2019 in Retirement with 0 Comments

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The word is out that the Social Security Administration will be offering a VERA (Voluntary Early Retirement Authorization, aka “early out”) for employees this year. Employees must notify the agency by May 31 of their interest in accepting the early out and, if approved, they must be off the agency’s rolls by August 2.

Eligibility

To be eligible for early retirement, an employee must have either 20 years of creditable service and be age 50, or have 25 years of creditable service at any age.

SSA is offering the VERA to all of their employees except Administrative Law Judges. Their April 2nd announcement on the early out stated that it was “effective immediately”.

This gives employees almost two full months to make their decision. Now, two months isn’t a terribly long period of time in which to make a decision that will affect the rest of one’s career/life, but it beats the heck out of the less than two week period EPA gave their employees in their 2017 early out.

What is the Best Date to Take the Early Out from SSA?

SSA employees who are covered under the FERS retirement system and are approved for the early out should exercise great care in choosing the date of their separation.

If they wait until the final date (August 2, 2019) to separate, they will cost themselves a month worth of their FERS annuity for a mere two extra days on the agency’s rolls.

A FERS retiree begins to accrue their annuity on the first day of the month after their last day on the rolls, so someone who separated on August 2, 2019 would begin accruing their FERS annuity on September 1, 2019 and would not receive their first payment until on or about October 1, 2019.

If, on the other hand, the retiree left federal service on July 31, 2019, they would begin to accrue their FERS annuity on August 1, 2019 – the next day. They would then receive payment on or about September 1, 2019; a full month before their colleague who chose to wait until August 2nd.

Why would SSA pick a date for employees to be off the rolls that would be disadvantageous to most of those who choose to leave?

It’s not malice on the agency’s part; rather it is a fixation with the end of a pay period. If the pay period ends on Saturday, August 3, 2019, most employees’ last day of work will be Friday, August 2nd.  There is no requirement that federal employees retire/separate on the last day of a pay period; they can leave any day they choose. The only folks who will be happy with people separating at the end of a pay period work in the payroll office, or are group timekeepers.

I would hope that SSA provides some type of retirement information to those employees who are thinking of taking advantage of the early out; and that the information covers the most advantageous day to retire.

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 [email protected] to discuss schedules and costs.

© 2019 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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