How Many Federal Workers Have Quit? Key Insights & Solutions

It’s a question echoing across headlines, workplaces, and policymaker meetings in 2025. The federal government, once seen as a stronghold of job stability, is undergoing one of its most dramatic shifts in decades.

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According to recent reports from The New York Times, over 75,000 federal employees have accepted buyout offers, taking a one-time payment to voluntarily resign. Meanwhile, a Wikipedia-sourced report from April 14, 2025, confirms 55,000 confirmed job cuts, 76,000+ buyouts, and more than 145,000 other planned reductions.

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Whether driven by cost-cutting measures, automation, or systemic restructuring, the scale of this change is unprecedented. But behind every number is a real person—a family navigating uncertainty, a retiree adjusting their plans, or a mid-career employee rethinking their path.

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In this blog, we will break down the numbers, uncover the reasons behind this federal workforce shake-up, and provide actionable financial advice for current and former government employees navigating this uncertain terrain.

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Why Are So Many Federal Workers Quitting?

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This isn’t a simple case of a few departments downsizing—it’s a broad, systemic shift. Several converging forces are leading to the federal government’s largest wave of exits in modern history:

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1. Aggressive Cost-Cutting Measures

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With increasing pressure on federal budgets and rising national debt, many agencies have been forced to offer Voluntary Separation Incentive Payments (VSIPs)—better known as buyouts. These one-time payments (usually $25,000–$40,000) help reduce payroll obligations without formal layoffs.

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2. Retirement Surge

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Many federal employees are nearing retirement age. Rather than wait out changes, many are taking the opportunity to leave with full or partial benefits, especially if buyouts are on the table. These exits are particularly concentrated in agencies like the Department of Veterans Affairs, the SSA, and the IRS, which have an aging workforce.

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3. Post-Pandemic Burnout

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COVID-19 dramatically altered how federal workers operated. With many forced into remote settings, followed by rigid return-to-office policies, employee dissatisfaction has grown. Inconsistent communication, limited flexibility, and added workloads have all contributed to burnout, prompting many to call it quits.

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4.Technology Displacement

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AI and process automation are reshaping government workflows. Administrative tasks once managed by teams are now handled by software. This technological shift has reduced the need for many mid-level roles and encouraged departments to downsize in anticipation of future efficiencies.

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5. Attractive Private-Sector Opportunities

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Government pay scales often fall behind the private sector. With remote work and hybrid roles becoming the norm in tech, consulting, and healthcare, many skilled federal workers are being recruited with higher salaries, better benefits, and more workplace flexibility.

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How to Manage Finances During & After a Federal Exit

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When a stable federal job ends—whether by choice or circumstance—it can feel like your financial foundation has been shaken. 

But this moment of uncertainty can also be a turning point. Managing your finances after a federal exit isn’t just about surviving; it’s about re-strategizing and building a new, more flexible financial life.

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Here’s a step-by-step guide to help you navigate the transition with confidence:

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1. Take Inventory of Where You Stand Financially

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Before making any big decisions, pause and take stock of your current situation. Clarity is power.

Ask yourself:

• How much savings do I have set aside?
  
  
• What are my monthly fixed expenses (housing, insurance, utilities)?
  
  
• Do I have any debts or loans to manage?
  
  
• What benefits or final payouts will I receive from my federal position?
  
  

Write this down in one place. Use budgeting tools or a spreadsheet to see exactly what you are working with. This creates your starting point.

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2. Understand What Happens to Your Federal Benefits

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Many people mistakenly assume their benefits vanish once they exit federal service. That’s not always the case. You may be entitled to options depending on your years of service, age, and type of separation.

Here’s what to look into:

• Pension (FERS):
  If you’ve worked at least 5 years, you may qualify for a deferred retirement benefit—even if you leave before retirement age. Learn the eligibility rules for Immediate, Postponed, and Deferred retirement under FERS.
  
  
• TSP (Thrift Savings Plan):
  You can leave your funds in the TSP, roll them into an IRA, or begin withdrawals (depending on age). Understand the tax implications and avoid early withdrawal penalties.
  
  
• Health Insurance (FEHB):
  If you meet certain criteria (5+ years of continuous coverage and retirement eligibility), you may continue FEHB into retirement. If not, explore:
  
  
  
  • Temporary Continuation of Coverage (TCC) – available for up to 18 months.
    
    
  • ACA Marketplace – you may qualify for subsidized plans.
    
    
  • Spouse’s Employer Plan – often the most affordable option if available.
    
    
• Life Insurance (FEGLI):
  You may be eligible to convert or port your coverage. Reach out to OPM or your HR office before separation.
  
  

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3. Use Your Buyout or Severance Wisely

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If you’ve received a buyout or severance package, it’s important to treat that money as a financial cushion, not a bonus. 

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This lump sum is meant to help you bridge the gap between jobs or support you while you explore your next steps, so use it strategically. Start by setting aside enough to cover your essential living expenses for the next few months, including rent, food, and insurance. 

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4. Revisit Your Long-Term Financial Goals

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Revisiting your long-term financial goals after leaving federal employment is essential, especially when it comes to retirement planning. Here are some viable options for former federal employees:

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• Leave Your TSP Funds in the Federal System

You can leave your Thrift Savings Plan (TSP) funds in the federal system after leaving federal employment. While you won’t be able to contribute more, the funds will continue to grow. This is a good option if you're satisfied with your current investments and don’t want the hassle of moving them. Checkout the TSP calcultor.

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•  Roll Over Your TSP into an IRA

Rolling your TSP funds into an IRA provides more investment options and flexibility. IRAs allow for tax-deferred (traditional) or tax-free (Roth) growth, depending on which type you choose. This move also gives you more control over your portfolio, which can be beneficial as you transition to a new financial phase.

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• Transfer Your TSP to a New Employer’s Retirement Plan

If your new employer offers a retirement plan like a 401(k), you can transfer your TSP balance to consolidate your retirement savings. This keeps your funds in one place for easier management. Compare fees and investment choices in the new plan to ensure it aligns with your goals before transferring.

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• Open a Traditional or Roth IRA

Opening a traditional or Roth IRA allows you to continue saving for retirement. A traditional IRA offers tax-deferred growth, while a Roth IRA provides tax-free withdrawals in retirement. Depending on your income, tax situation, and financial goals, either option may be ideal for continuing your retirement planning.

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• Consider a SEP IRA or Solo 401(k)

If you’re moving to self-employment or freelance work, a SEP IRA or Solo 401(k) can be an excellent choice. These accounts offer higher contribution limits than traditional IRAs, allowing you to save more for retirement while working independently. They are designed specifically for freelancers and small business owners.

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• Reassess Other Long-Term Financial Goals

It’s not just about retirement—review other long-term financial goals, like saving for a home, education, or building an emergency fund. After leaving federal employment, priorities may shift, so it’s important to align your financial strategy with your new circumstances and future objectives.

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Planning for the Future After Federal Employment

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Life after federal employment presents new financial challenges, but with the right planning, you can stay on track for long-term success. Whether managing your buyout or severance, adjusting your budget, or exploring retirement options, proactive steps are key. For those navigating complex federal pension decisions, working with a Federal Pension Advisor can provide essential expertise. We guide you through the intricacies of federal benefits and retirement planning, helping you make informed choices for a secure financial future. 

With professional advice, you can confidently move forward into the next chapter of your life.

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