As the fiscal year draws to a close, tens of thousands of federal employees face the expiration of their deferred resignation periods, potentially triggering a wave of retirements that could overwhelm the Office of Personnel Management (OPM). This comes amid broader efforts by the Trump administration to reshape the federal workforce. OPM projects nearly 300,000 positions will be eliminated by year’s end, about an eighth of the workforce tally at the start of 2025. The reductions, driven by hiring freezes, incentives like buyouts and early retirements, and deferred resignations, mark a significant contraction in the civil service.
Deferred resignation programs, launched earlier this year, allowed eligible employees to resign while remaining on paid administrative leave until their separation date, often September 30, to preserve benefits. OPM reported over 150,000 acceptances by summer, with the majority expected to finalize this week. A separate count by the Partnership for Public Service pegs total federal workforce cuts, including layoffs, attrition, and deferred resignations, at just under 200,000 through August, with heavy impacts at the Department of Defense (55,000), Treasury (30,000, mostly IRS), and Agriculture (21,000). Of the projected 300,000 losses, about 21,000 stem from reductions in force (RIFs) and probationary layoffs, while the rest arise from natural attrition under a prolonged hiring freeze.
Compounding the workforce reduction, the OMB has directed agencies to prepare for mass layoffs if a government shutdown occurs on October 1, 2025, due to Congress failing to pass a funding deal.
Uncertainty lingers over how many departing workers will opt for retirement, but historical patterns suggest a high uptake. Roughly 15% of federal employees are traditionally retirement-eligible at any given time, and buyout experiences show strong participation from this group. OPM data already signals an uptick: applications received in May and June matched end-of-year surge levels, while July and August volumes exceeded 2024 figures. Through August, OPM received 88,062 retirement applications, a nearly 38% increase from 2024.
However, retirees face delays. Application processing averaged 59 days in July and 70 days in August, up from historical norms. The full annuity timeline can stretch to three to five months, or longer in complex cases, and a looming partial government shutdown starting October 1 could exacerbate this, furloughing personnel staff, interrupting retirement paperwork at the agency level, and delaying payouts for unused leave.
In the face of continued uncertainty in the federal workforce, it’s imperative to understand your federal benefits and get a clear snapshot of how well you’re prepared for the unexpected. Reach out to a Federal Retirement Consultant (FRC®) who can provide you with the insight you need to move forward with confidence.
