Deferred Resignation Costs: Your Retirement Planning

Workforce restructuring leaves questions that last well beyond the departure of a colleague. Who will cover the work? What will the next staffing decision look like? For federal employees thinking about retirement, those workplace questions can also prompt a closer review of household income, benefits, and the timing of a career transition.

A new Government Accountability Office report puts deferred resignation costs in focus. Its findings offer useful context for understanding the scale of recent changes, while your own retirement decision still depends on personal factors: service credit, age, insurance needs, savings, and the options actually available through your agency.

Book a No Cost Retirement Review

What GAO's $6.7 billion estimate measures

In its September 15, 2026 report, GAO estimates that agencies in its review spent $9.5 billion in salary costs for paid administrative leave in 2025. About $6.7 billion was associated with the Deferred Resignation Program, based on program assumptions and payroll-provider records. The review covered 76 agencies representing approximately 95 percent of the civilian workforce.

These are salary-cost estimates, not a complete calculation of the program's net costs or long-term savings. FEDweek's coverage also places the spending alongside the large number of employees who accepted deferred resignation offers. The figures should not be expanded into a larger total by adding unverified benefit or productivity estimates.

GAO found reporting limitations, including holiday leave recorded as administrative leave, that could overstate leave usage. OPM issued guidance addressing that issue. GAO also recommended fuller disclosure of unresolved data limitations and a separate reporting category for workforce-reduction leave; OPM agreed. Better tracking would help officials compare near-term costs with intended savings.

What this means for employees who stayed

The report does not establish that every agency is understaffed or that every remaining employee has inherited an unsustainable workload. Conditions differ by office, occupation, and mission. Still, if your own responsibilities have changed, it is reasonable to revisit the assumptions behind your retirement timetable.

Start with what you can document. Have your duties expanded? Has your expected retirement date changed? Has your agency issued a specific restructuring notice or an offer you are eligible to accept? Separate those facts from rumors about future programs.

Then identify the decision you actually face. Continuing in your current position, seeking another role, and retiring are different choices with different income implications. A useful plan compares realistic alternatives instead of treating an unsettling headline as a reason to leave immediately.

Keep deferred resignation, VERA, and VSIP distinct

A deferred resignation arrangement is not automatically an early-retirement entitlement. Do not assume a past program remains open or that an offer made elsewhere applies to your position. Obtain the current written terms from your agency before planning around any departure option.

Voluntary Early Retirement Authority (VERA) allows an authorized agency to offer retirement under reduced age and service thresholds to eligible employees. Generally, the age-and-service combinations are age 50 with 20 years of service, or any age with 25 years, along with other requirements. Coverage and the offer window matter.

Voluntary Separation Incentive Payments (VSIP) are separation incentives under applicable authority. They are not an annuity and do not independently establish retirement eligibility. Review any repayment conditions before accepting an incentive, particularly if you might return to federal employment.

Before responding to an offer, compare the projected annuity, any incentive, insurance costs, and the period between salary ending and dependable retirement income beginning.

Review the numbers behind your retirement date

An earlier exit can mean fewer years of creditable service and less opportunity for future pay increases to improve your pension. It does not automatically erase the high-3 average you have already earned. Under OPM's FERS computation guidance, high-3 is the highest average basic pay during any three consecutive years of service.

Request estimates for your preferred retirement date and at least one alternative. Confirm the service dates and pay assumptions used, rather than comparing estimates built on different inputs. Consider survivor elections and the monthly income your household needs, not just the headline annuity amount.

Insurance also deserves a separate check. Review whether your proposed retirement path permits continued FEHB and FEGLI coverage and which enrollment requirements apply. OPM's retirement guidance distinguishes immediate, postponed, and deferred benefits; those differences can affect both payment timing and insurance options.

Check your records without assuming they are wrong

Government-wide leave-reporting limitations are not proof of an error in your personal retirement or insurance record. Reviewing your documents is useful because an estimate is only as reliable as the information supporting it.

Gather your personnel actions, service history, and recent earnings statements.
Compare retirement estimates with the service and pay records used to prepare them.
Confirm current insurance elections, beneficiaries, and relevant enrollment history.
Ask your agency benefits office to explain discrepancies and document corrections.
Keep copies of submitted forms and a record of outstanding questions.

IBA's retirement paperwork service can help you prepare for the application process. Careful preparation can reduce avoidable omissions, but it cannot guarantee an agency or OPM processing date. Include a cash reserve for a possible gap or period of interim payments in your household plan.

Give your TSP its own planning review

Changes at work can shorten the time before you expect to use retirement savings. Review your cash needs, investment time horizon, and comfort with market fluctuations before making allocation or withdrawal decisions.

Your TSP does not need to mirror the uncertainty of your workplace. Equally, no strategy can promise continuous growth, complete protection from market losses, and unrestricted access. Consider how a withdrawal would affect future income and check the applicable distribution and tax rules before relying on it for a career transition. IBA's TSP guidance can help you organize those questions.

Make your next decision with a clearer plan

The scale of deferred resignation spending is a public-policy question. Your retirement readiness is a personal planning question that benefits from accurate records and realistic comparisons.

Internal Benefit Advisors helps federal employees review retirement timing, benefit estimates, insurance choices, and TSP considerations. A retirement benefit review can help you bring those pieces together around the dates and needs that matter to your household.

Book a no cost review to discuss your options and prepare for your next career decision with clearer information.