Understanding Your Retirement Options: VERA vs. DSR

Making Good Decisions in Uncertain Times: Navigating Early Retirement and Reductions in work force

Hi everyone, I’m Mike Lanway here, an instructor for federal agencies and the creator behind educational resources at All About FERS. Lately, I’ve been hearing from a lot of federal employees who are facing difficult choices—mainly around early retirement offers, potential reductions in force (RIF), and the little-known option called Discontinued Service Retirement (DSR).

If you’re feeling unprepared, uncertain, or just plain overwhelmed, you’re not alone.

Many federal employees are eyeing Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Pay (VSIP) as a potential exit from the chaos. But there’s a catch—once you walk away, what are you walking into? What job would you take next? What’s the market like? What’s the compensation like? And most importantly, are you truly ready to retire?

At the same time, staying put feels like gambling. Maybe the RIF misses you. Maybe it doesn’t. Maybe you’re offered something you can live with. Or maybe you’re left scrambling.

This is what our webinar—and this blog—is all about: helping you make sound, well-informed decisions during uncertain times.

Understanding the Retirement Options: VERA vs. DSR

Let’s start by clarifying the difference between VERA and DSR.

VERA (Voluntary Early Retirement Authority) is initiated by your agency. You must meet specific criteria—typically, either 25 years of service at any age or 20 years of service at age 50 or older. It’s voluntary and often comes with a time-sensitive offer. If you’re ready to retire and the stars align, it can be a graceful exit.

DSR (Discontinued Service Retirement), on the other hand, is triggered by an involuntary separation—like a RIF or your position being eliminated. It’s not something you ask for; it’s something that happens to you. In that case, you’re eligible for retirement, provided you meet the age and service requirements. It’s more of a “last resort” for those hoping to stay in their federal careers.

The good news? From a retirement benefits perspective, there’s no difference between the two. Same annuity calculation. Same access to FEHB and FEGLI (if you’ve been enrolled for at least five years). Same FERS supplement (once you reach your Minimum Retirement Age). Same COLA rules (which start at 62, if you’ve been retired at least 12 months).

The “High-Three” and Other Numbers to Know

Your annuity is based on your “high-three” average salary—your highest consecutive 36 months of earnings. This doesn’t have to be the last three years of your career, just the highest-paid 36 months. Even if your grade gets cut, that high-three is locked in.

So if you’re doing math, remember: the FERS basic annuity is typically 1% of your high-three per year of service. And yes, you can substitute your own numbers into the formulas we walk through in the webinar.

Health, Life Insurance, and Financial Considerations

One of the most common questions I get is: “Will I lose my health insurance?” Generally, no—if you’ve been enrolled in FEHB and/or FEGLI for at least five years prior to retirement, you can carry them into retirement.

Life insurance can also continue, and there’s a 60-day open window post-retirement where you can enroll without underwriting. That can be a huge asset—literally—especially when planning for loved ones who may survive you.

What If You Want to Work Again?

Here’s a crucial heads-up: if you accept a VSIP and later want to return to federal service (as an employee or contractor), you may need to repay the VSIP amount before your first day back. That can be a big surprise for folks planning to pivot into consulting.

Also, be aware of the 10% early withdrawal penalty for tapping into your TSP before age 59½—unless you separate from service in the same calendar year you turn 55 or older.

So… Should You Take the Offer?

That’s the million-dollar question. And the answer is: it depends on you.

What are your personal and professional priorities? Do you want to stay in federal service if possible, even if it means a lower grade or a pay cut? Or are you ready to walk away—on your own terms—with a solid plan for what’s next?

DSR means waiting, hoping you don’t get hit by the RIF. VERA means stepping forward, often quickly. Neither path is better than the other—it just depends on your situation.

Let Your Mind and Body Align

In the end, a good decision is one where your body and your mind both say, yes. Not where you feel panicked, nauseated, or uncertain—but where you’re grounded. Calm. Ready.

We all end up at the same airport, but we’re headed to different destinations, with different baggage, goals, and traveling companions. Your journey is unique. And your decision should reflect that.

We’re Here to Help

If you’re grappling with these decisions, reach out. On the All About FERS website, you’ll find a “Request” tab on the top right—click it, fill out the form, and we’ll set up a no-cost appointment. If you’re a DIYer, I’ll help you map it out. If you need a guide, I’m here to walk beside you.

And if your agency wants a deeper dive, we offer webinars and on-site seminars to help your team navigate these complex transitions with clarity and confidence.

Thanks for spending your time with us today. I appreciate your trust. Whatever you decide, I hope it’s the right choice for you, your family, and your future.