VERA vs. RIF

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Q. I am a level 13 postmaster who will receive a reduction-in-force notice in June 2014. My position as EAS 13 Postmaster will be demoted to an EP-55 Part-time Career employee. My plans were to take the RIF in June and leave in September 2014.

I am 51 years old and have been a CSRS employee since I was hired in 1983. I was counting on leaving under the discontinued service retirement in June. However, now that they have offered this Voluntary Early Retirement Authority even though it offers no incentive, should I take the “safe” out now or wait until the RIF next June? (I am aware that I will take a 2 percent-per-year reduction for each year I retire under the age of 55.)

A. I can only echo your observation that the VERA is a “safe” option. I don’t know if it’s the best option.

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  1. Run some numbers. For example, assume your average for retirement is $50K. Given the choice is now or in a year. If you take the VERA you lose 2% you would have gotten by working another year plus another 2% penalty for a year unworked under 55, so you lose 4%. 4% of $50K is $2K in benefits. You get $25K for the VERA, so that’s roughly 12.5 years before staying pays you back more. So if you think you’ll live past 64 the VERA isn’t looking good from a purely financial perspective. Obviously this isn’t comparing taxes and just a rough estimate.

    Now from a peace of mind point of view, it might help you to live past 64 if you take the VERA now. But you need to look at the values and be sure you’re okay with what you’ll be getting.

  2. This Postmaster might want to check his or her state unemployment rules they may permit a person to recieve a pro-rated amount of unemployment for the differance in pay from a EAS-13 to a EPM-55.

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