Editorial: Postal Early Retirement Incentives

The US Postal Service last year failed to promote the unique advantages of VERA to FERS employees. Attached is an actual offer from USPS of voluntary early retirement to a FERS employee that was age 56 with less than 25 years of service. Normally he would need 30 years of service to get an unreduced annuity. In a VERA that was reduced to 20 years. The VERA offer and annuity estimate he received did not mention or include his monthly FERS retirement supplement–an omission of roughly $1,000 per month!

Postal employees in the post-1983 retirement system, FERS, get three incentives to retire early in a VERA. The oft-heard complaint about a “penalty” for retiring early in a VERA applies mainly to the dwindling number of older CSRS employees. They make up less than 20% of the USPS workforce today. FERS employees enjoy these advantages in a VERA:

First, their Basic annuity is not reduced regardless of age (this is the VERA annuity estimate that USPS automatically provides).

Second, and often overlooked, they receive an extra monthly payment called a “FERS annuity supplement” between Minimum Retirement Age (MRA is about 56) and age 62 (the USPS does not provide this information automatically). The FERS annuity supplement normally applies after MRA and 30 years of service. In a VERA, however, the minimum years of service to qualify for the FERS annuity supplement is reduced to 20. Few people appear to be aware of how substantial this amount is.

Third, many FERS employees have large sums in their Thrift Savings Plan (TSP) accounts due in part to matching funds from the USPS. This money can be withdrawn as an annuity at any age without an early withdrawal penalty. See “Important Tax Information About Payments From Your TSP Account” at http://www.tsp.gov/forms/octax92-32.pdf . Lump-sum withdrawals can be made without an early withdrawal penalty after retirement and age 55.

VERA flopped in the USPS because eligibles in FERS only received an estimate of their Basic annuity. They also needed to know what their FERS annuity supplement would be after MRA and the possible annuity from their Thrift Savings Plan. The USPS did not provide retirement counseling before the VER deadlines. So why would a low response rate be a surprise?

Don Cheney
Auburn WA
doncheney [at] live.com

33 thoughts on “Editorial: Postal Early Retirement Incentives

  1. my x wife started working for the postal service in 1977 or near that year she is now 54years of age,she got an early retirement last year, we were married in 1972, i want to know if we were married over 10 years as a spouce, am i intitle to something now that i,m disable please, let me know i also have a phone 1773-628-9446. thanks mr. johnnie booth

  2. Postal Service suffers the most corruption of any job that I ever held. Drinking and golf buddies get promoted while hard workers just get more work and a hard time. We all know the stories of the boss’s pet who flunked the ASP test three times and becomes a Postmaster who dosen’t actually have to work at thier position destination. Bottom line if SATAN offers you something to disconnect from HELL take the money and run.

  3. What the heck. No on should take this offer. Just think – if not one takes this one – they will have to up it again. They screwed enough people who took it before and was told the USPS will be offering NO $$$$$ because they don’t have any. Hold on for the BIG $$$$.

  4. What the heck. No on should take this offer. Just think – if not one takes this one – they will have to up it again. They screwed enough people who took it before and was told the USPS wilol be offering NO $$$$$ because they don’t have any. Hold on for the BIG $$$$.

  5. Jack Potter says that he will go up into the mountains for seven years and then come back with a plan that will save the post office. he is taking all of his girl friends with him too.

  6. The main reason I retired when I did was not only management, but even more, some of the back stabbing fellow employees. As you all know, a lot of crazy’s out there! I can just imagine how it is now. I can just hear the crying from some of these career light duty cry babies. If here is excessing I hope they are the first ones to go. I always say what goes around, comes around. There’s may just be coming their way!

  7. Who took VER w/o incentives? What are you people doing now? What made you decide to leave, you all have enough outside income to survive?

  8. I took the early retirement in 2004 best move I ever made. Less stress less hassle and I had enough to live on with my TSP FERS and Supplemental. Remember only whole years count to supplement Jan 1, to Dec 31 any other service will not be credited. If you can afford to go I recommend it to you all.

  9. I think all you fellas should take an early out so all us lovely ladies can have your plum positions. Move over gents and let us ladies take over. Amazon mail service and we will deliver.

  10. If I take an early out now with 23 years of service, I will be elligable for food stamps, government assisted housing,and heating assistance.

  11. Thank you for all the information. I am in the post office, but my dad is the one I am researching this for. Hes been in 20 plus and knees are killing him. I am sure he did not have all the information, and I will see to it he gets it. Thanks again.

  12. I took the VERA in April. I have pleanty of money to meet my needs and all the stress is gone. If you’re FERS, VERA is a golden opportunity. Run the numbers and you might be surprized. Don’t listen to those idiots that tell you to wait for a cash incentive; those morons will be unhappy wherever they are.

  13. I took the Vera in June. I made sure I was aware of everything I could get. You need to educate yourself about your retirement. Don’t expect people in Human Resources to give all the information.

  14. To all the high up in management types who are pushing the early retirement without incintive ; why don’t you retire ,as your worth the weight of at least 2 or 3 actual workers in salary money saved.

  15. Don’t take an early retirement. You’ll starve to death out there in the real world. All your old skills are antiquated and your old now. No other employer wants you. If your sick of working become a supervisor and beef up your high 3, then when you retire, you can apply for managerial jobs and stand a chance at surviving in the real world

  16. Wake up, we’re being Railroaded into privitization. It will be a lose for all Americans financially. It will be a windfall for the Foxes in the Hen house who are Engineering the plan and stand to gain from our privitization. But, don’t take the early out unless they add 5 years to your pension value. If FEDx or UPS take us over, we will get a payraise.

  17. Hang in there. You may get an oppourtunity to continue in your job after Privitization happens and collect a pension from the government after the government is no longer your employer.

  18. Who in their right mind would take a early retirement without incintive in a repressed economy. You would be putting an strain on your spouse to make up the difference so you can sit home and wo is me. The 3 who took the VER in this office are doing just that according to their spouses.

  19. Lon, are you sure of what you are saying? My understanding is Supplemental income can only be taken if one retires on a VERA. To calculate your supplemental income = number of yrs. under FERS/ 40.
    Forty(quarters) represent full social security retirement. The factor that you receive is then multiplied by how much money one would receive at 62yrs old from social security. example. Jeanell will have 25 yrs postal service under VERA. 25/40= 0.625. She is expected to draw $1385.00 at age 62 from social security. Therefore .625x $1365.00=$853.12 would be her approximate supplemental income until she reaches 62 yrs of age. Lets examine her totals. Basic annuity $1000.00/mo. survivors benefits taken 10%. Annuity now down to $900.00/mo. Thrift savings plan maybe 90,000.00. Lets take insurance (family coverage from basic annuity $900.00 minus 300.00/mo for insurance. Now we are down to $600.00/mo plus the supplemental income of $853.12 which totals 1453.12/mo. Now lets add in our thrift savings factor.If we don’t want our thrift to be exhausted before our 95th birthday; perhaps we had better get a frugal amount out. Let’s say. $350.00/mo. Our grand total for ONE MONTH OF RETIREMENT WITHOUT TAXES BEING TAKEN OUT IS $600.00 plus $853.12 plus 350.00 for a GRAND TOTAL OF $1803.12 PER MONTH AND A YEARLY GRAND TOTAL OF $21,637.44. I DON’T THINK MOST POSTAL WORKERS OR ANYONE ELSE VIEWS THESE MEAGER TOTALS AS HEAVENLY BLISS. LET’S LET THE TRUTH BE TOLD

  20. It seems rather odd that the P.O. wants people to retire and YET they withhold important information such as this that could and would encourage more people into early retirement. Since they’re not offering any money for early retirement, why not lay out ALL of the info so people that are contemplating early retirement can come to a decision a little bit sooner.

  21. Very inadequate analysis, at least for those FERS under the MRA. Too many reasons to mention, go to http://postalintelligence.blogspot.com and scroll down to March 2009. FERS is a good retirement system for a regular retirement, but a complete disaster for those under the minimum retirement age. And for those over, don’t forget your annuity won’t be indexed for inflation until you reach age 62. No COLAs during a time of projected high inflation will enable you to watch your annuity melt away to nothing in just a few short years. FERS early out? Do a little research and you’ll see why almost nobody has taken it!

  22. the post office would not offer any monetary incentives because they are giving away all of the money to the fat cats in the higher up offices

  23. If the postal service is wanting people to take early retirement, why not just leave the early retirement “open” until they have achieved the number they desire. Also, they definitely need to be more available to answer your questions. I submitted my application along with a letter requesting a statement of the amount I owed to purchase my substituting time. I never received any information. Before I decide to retire, I need to know what my life insurance will cost or if I can even continue it, what my health insurance will cost and so on. I cannot make a major decision without considering all benefits and cost

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