VERA Retirement: What Happens to Your Income Before You Reach MRA?

A VERA retirement can allow eligible federal employees to leave service years earlier than they otherwise could. But retiring early can also create an income gap between your retirement date, your Minimum Retirement Age (MRA), and age 62.

Those dates matter more than the headline pension number.

Your FERS Pension Doesn’t Get a COLA Yet

For most FERS retirees, cost-of-living adjustments don’t begin until age 62.

So someone who retires under VERA at 50 could receive the same basic annuity amount for years while the cost of living continues to rise. The pension isn’t reduced because you retired early, but you won’t have the protection of a COLA during those years.

The Supplement May Not Start When You Retire

The FERS annuity supplement is designed to help bridge the gap between retirement and Social Security eligibility. But if you retire under VERA before reaching your MRA, the supplement generally doesn’t begin immediately. Instead, you wait until you reach your MRA.

For example, someone with an MRA of 57 who retires under VERA at 50 could have seven years between retirement and the start of the supplement.

Once the supplement begins, it ends at age 62. It can also be reduced if you have earnings above the applicable earnings limit.

What This Means for a VERA Offer

A VERA retirement shouldn’t be evaluated by asking only, “How much will my pension be?”

You also need to ask:

• How many years until I reach my MRA?
• What income will cover that period?
• How will I handle the years without a FERS COLA?
• How will my TSP and other savings fit into the plan?
• What happens to my income when the supplement ends at 62?

For some employees, the answers make VERA an excellent opportunity. For others, the income gap may make waiting longer the better choice.

The important thing is to run the numbers before accepting the offer, not after you’ve already left federal service.

If you’re considering a VERA offer, a Federal Retirement Consultant (FRC®) can help you map out your income from your retirement date through MRA and age 62 so you can see what the decision actually means for your retirement.