A sharp rise in federal retirements, coupled with an expected wave of more government layoffs, is prompting high-stakes career decisions for many federal employees.
Through June, more than 72,000 federal employees have filed retirement claims with the Office of Personnel Management, data shows. That represents a 38% increase in claims compared to the same period last year, driven by a wave of cuts across federal agencies by the Trump administration.
Starting in late January, Elon Musk and his Department of Government Efficiency (DOGE) worked to cut tens of thousands of federal workers. But even after Musk’s departure, the Trump administration has made clear that it intends to continue downsizing the federal workforce.
Last week, the Supreme Court ruled that the Trump administration could move forward with extensive government job cuts. Thousands of federal employees across more than a dozen agencies, including the Departments of Agriculture, Commerce, Health and Human Services, State, Treasury, and Veterans Affairs, are slated for dismissal.
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Financial advisors who specialize in working with federal employees say the options available to their clients have become clearer compared to the start of the year.
“Earlier this year, there was so much more uncertainty around what the options were, and so in some ways … some discussions were driven by a lot of fear, because of the uncertainty of just not understanding what the deferred resignation program really looked like and whether it was legal and things like that,” said Amy King, founder of Instar Financial Planning in Fallston, Maryland. “Now there’s not so much uncertainty anymore. It’s really just that they’ve made their decision. Now how do we effectively plan, given the decision they’ve made and the timeline that we know about.”
Still, continued cuts across the government, as well as uncertainty around future regulations, make navigating retirement decisions for current federal employees difficult.
“In some cases, whole offices have basically stopped having any work come down to them, like they’re just being totally hobbled and cut out at the knees,” said Andrew Katz-Moses, founder of Katz-Moses Financial in Washington, D.C., “So they’re very interested in exploring if it’s possible for them to actually retire.”
Making that determination looks different for every worker, but advisors point to a couple of common considerations.
Parsing retirement and buyout programs
Federal workers considering retirement can have a variety of potential offers available to them, each with its own set of rules and financial implications. For many, the choice revolves around a handful of options, including the voluntary early retirement authority (VERA), the voluntary separation incentive payment (VSIP) — commonly known as a buyout — and, in some cases, agency-specific initiatives such as a deferred resignation program (DRP).
“I would say 75% of the new clients that I’ve received, federal employee clients that have come in, are looking at whether or not they can accept the deferred retirement offer that came out earlier, and several of them are taking it,” King said. “Several have taken the voluntary early retirement authority, the VERA, in conjunction with DRP.”
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For eligible workers, deferred retirement could also be an appealing option, but it comes with implications of its own, King said.
“If they’re leaving and they’re going to end up with a deferred retirement, which means that it’s not going to kick in until probably 62 maybe as early as 57, what are they doing in between when they retire, until they’re eligible to collect their annuity?” King said. “What are they doing for health care? What are they doing for income? What are their options for whether or not the Federal Employee Health Benefit kicks back in or not? So it’s not just the standard stuff that normally comes with financial planning around literally, like, ‘Can I retire?’ It’s also the benefits part of it.”
Betting on an uncertain future
Beyond the finances, advisors say that many federal employees are also having to factor in assumptions about the future of the government into their decision.
Earlier this year, some 40,000 federal employees resigned through the Trump administration’s fork-in-the-road offer, according to the Federal News Network. Now, many of the workers who declined to take that offer find themselves in limbo.
“Sometimes it makes a lot of sense, like they should take it, and sometimes they also have to think about, okay, if they don’t take it, what’s the risk that they come back and get fired anyway, and now they’ve not taken this buyout that was on offer,” Katz-Moses said.
Breaking away from the numbers
As a new wave of federal layoffs ramps up, advisors say that it’s easy for workers to feel overwhelmed by all of the variables at play. That’s why it is crucial to talk about emotions first before jumping into logistics, according to Katz-Moses.
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“I always like to check in on the emotions first and [say] like, ‘Let’s step back. Let’s get out of the numbers and the logistics for a second. What do you really want right now? What’s most important?'” he said. “‘Even given all the turmoil and tumultuousness of what’s happening right now, if this goes really well, what will happen for you?’ Start to, you know, vision out what that ideally looks like, and then we have to look at the numbers.”
