Best Date To Retire When You Reach Federal Retirement Age
Another thing to keep in mind is that there are in fact best days of the year to retire from FERS. Thats because, once you retire as a FERS employee, your retirement date becomes the first of the following month. Your first FERS annuity check then will be sent to you on the first day of the following month after retirement. For example, lets say you retired on February 14. Your annuity retirement date would be March 1 and your first FERS annuity check would arrive on April 1.
For most government employees used to getting paid twice a month, that gap can be a little rough to navigate. But you can reduce the impact of this gap with a little planning. We recommend a couple steps here: The Best Dates to Retire from FERS.
Retirement Eligibility And Annuity Computation
How do I know if I am eligible to retire?
Your Federal Employee Benefit Statement available in Employee Express provides you with your retirement service computation date . Section H of the statement includes a gross estimate. Your Benefits Specialist can provide you with a detailed estimate and verify that your retirement SCD is correct. Different types of appointments and owing a deposit and/or redeposit can make a difference in your retirement SCD. Work schedules throughout your career may also affect the computation of an annuity. The rules are complicated and different depending on your covered retirement system. We highly recommend you check with your Benefits Specialist before you make a decision about accepting a VERA.
How is my annuity determined?
FERS Annuity The formula for computing a FERS Basic Annuity based on is as follows:
- 1 percent of your high-3 average by your years and months of or
- 1.1 percent of your high-3 average and years and months for those who retire at age 62 with 20 years of creditable service.
- Unused sick leave may be used for additional credit toward annuity computation. There is no annuity reduction if you are under age.
- The commencing date of your annuity is the first day of the month following retirement.
CSRS Annuity The formula for computing a CSRS annuity based on is as follows:
Is additional time granted if I accept a VERA?
What is the FERS Annuity Supplement?
How is the FERS Annuity Supplement Calculated?
How Do I Contact Opm Retirement
OPMâs phone number for retirement services is 888-767-6738, but you can also contact them via email at [email protected].
Do you need help with your OPM retirement benefits? Give Melville Johnson, P.C. a or contact us using the form below and schedule your consultation with one of our highly experienced federal employment OPM attorneys today!
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Your Retirement Benefits Can Be Affected By Early Retirement
Certain federal benefits, such as your health insurance, wont carry over if you take certain types of early retirement. That isnt to say you cant get them back , but you wont be able to for the duration that you arent getting paid your annuity.
Generally, this principle applies to postponed retirement . As previously stated, postponed retirement allows you to put off your annuity payments until a particular time to avoid penalties you might otherwise incur. If you leave federal service early, however, it halts your federal health benefits, among other things.
To elaborate, federal employees can keep their benefits when they retire . However, you arent allowed to do this with a postponed retirement account until your annuity begins to pay out.
Once your payouts begin, you will be allowed to reapply for those benefits, but in the meantime, youll need to find another way to receive health insurance coverage.
This same principle applies to other benefits as well, such as dental, vision, and TSP.
The Minimum Retirement Age
If you were born in 1947 or earlier, your MRA is 55. The oldest members of this group turned 62 in 2009. If born between 1948 and 1952, see the chart below:
| Birth Year |
Anyone born in 1970 or later has an MRA of 57.
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBCThe information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.
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Retirement Age And Years Of Service
Under CSRS, a worker with at least 30 years of service can retire at the age of 55 a worker with at least 20 years of service can retire at the age of 60 and a worker with 5 or more years of service can retire at the age of 62.
Federal employees are fully vested in the FERS basic retirement annuity after five years of service. The FERS minimum retirement age for an employee with 30 or more years of service was 55 for workers born before 1948. The MRA under FERS began to increase in 2003 for workers born after 1947. The MRA for employees born between 1953 and 1964 is 56. It will increase on an incremental basis to 57 for those born in 1970 or later. A worker who has reached the MRA and has completed at least 30 years of service can retire with an immediate, unreduced annuity. A worker with 20 or more years of service can retire with an unreduced annuity at age 60, and a worker with at least 5 years of service can retire at age 62.
Table 1. Minimum Retirement Age Under FERS
|
Year of Birth |
|
57 years |
U.S. Office of Personnel Management.
Early Retirement: Vera And Vsip
It is possible to collect an immediate, unreduced annuity before reaching MRA, but it is because the employing agency is restructuring or trying to reduce positions. Early retirements are only offered to specific federal employees for a defined timeframe under special circumstances. OPM allows agencies to offer these early out retirements through the Voluntary Early Retirement Authority . Sometimes, agencies will include an added bonus known as a VSIP which is a lump sum that, by law, cant exceed $25,000 gross.
To be eligible for a retirement through VERA, you either need to be at least age 50 with 20 years of service, or you can be any age with 25 years of service.
While the retirement calculation utilizes the 1% multiplier, those who take an early out are eligible to receive SRS income.
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Whats The Difference Between Postponed And Deferred Retirement
Postponed Retirement: If you are fully eligible for an immediate MRA +10 annuity but elect to delay your retirement to reduce or eliminate the age reduction, this would be a postponed retirement.
Example: A 56-year-old federal employee with 20 years of service who chooses to postpone the start of his annuity until he is age 60 is able to avoid the Age Reduction.
Deferred Retirement: If you are not yet fully eligible for a retirement annuity, you may apply for a deferred retirement when you reach the Minimum Retirement Age or meet other eligibility requirements.
Example: A 50-year old woman with 18 years of federal service could apply for a deferred retirement when she reaches her MRA of 57 years old.
Important note on benefit start dates: If you should decide to postpone the start date of your annuity, note that your FEHB and FEGLI coverage will terminate. However, once you begin receiving your annuity, you can reinstate this coverage if you met the eligibility requirements to continue coverage into retirement when you left federal employment. This does not apply to a deferred retirement because you would not be eligible for an immediate annuity when you left federal service.
The Special Retirement Supplement Is Impacted By A Couple Of Factors
If you transfer from the Civil Service Retirement System to the Federal Employees Retirement System , you must have at least one full calendar year of FERS-covered service to qualify for the supplement.
Your Special Retirement Supplement will be reduced or stopped if you have earnings from wages or self-employment that exceed the Social Security annual exempt amount, which was $17,640 in 2019.
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After How Many Years Must A Federal Employee Retire
According to the CSRS, CSRS Offset, and FERS systems, you have the option to retire after reaching minimum age and service requirements. Although, eligibility requirements differ between the CSRS/CSRS Offset and FERS systems.
Under CSRS/CSRS Offset, an employee may retire at age 62 with 5 years of service, 60 with 20, or 55 with 30.
FERS employees are eligible for an unreduced, immediate annuity at age 62 when they have 5 years of service. At age 62 or older and with 5 years or more of service, you can leave Federal service and receive a full pension. Only those who choose this type of retirement are able to get a 1% addition to their retirement calculation.
For some federal employees, you must have reached the Minimum Retirement Age to receive your retirement benefits. Refer to the following chart to figure your Minimum Retirement Age.
What Is Federal Retirement Age
From postal workers to VA doctors, weve had the pleasure of helping many federal government employees reach retirement. The first thing most of those folks want to know is at what age can they retire. So, what is the federal retirement age? Is it the conventional age of 65?
U.S. Census Bureau data shows that the average retirement age in the United States is 65 for men and 63 for women. That is lower than what is considered “full retirement age” for Social Security purposes, which is age 67.
The Federal Employees Retirement System has established a minimum retirement age that is actually lower than age 65. In fact, the average age federal employees voluntarily retire is 63.
Now, before you mark your 63rd birthday on the calendar, its important to know how your age impacts your federal retirement benefits. This will give you a better idea of what federal retirement age is right for you.
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How Long Will It Take To Process My Federal Retirement Application
According to OPM, common cases take around 2 months to process.
Your application could take longer if
- OPM needs additional information from you or your former employing agency.
- Your retirement claim has special circumstances, like applying under disability provisions, a specific retirement law , or evaluating a court order.
- OPM needs to contact you to make a benefit election, like a service credit deposit.
- OPM needs to contact another agency, like the Social Security Administration, if a benefit from them affects your claim.
If you submit your application in advance and make sure your Official Personnel Folder is complete, you can help reduce delays in processing. If you submit your paperwork early, your personnel and payroll offices will be able to complete their work before your retirement date.
Reduced Pension Minimum Retirement Age
With just 10 years of service, you are eligible for a retirement annuity at the Minimum Retirement Age. If you choose this option but have fewer than 30 years of service, reduce your planned benefit using the Age Reduction formula below.
Age Reduction First, specify your projected retirement date, then the date you will turn 62. The Age Reduction formula will reduce your MRA annuity by 5 percent per year in which your retirement date precedes your 62nd birthday.
Note: you may delay the commencement of your annuity to reduce or eliminate this age reduction.
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Fers Early Federal Retirement Age
Upon retirement, FERS will pay you a monthly benefit based upon your years of service worked under FERS, your income and the age you retire. Hence, the basic benefit is often known as the monthly annuity.
To be eligible for unreduced benefits you must meet one of the following criteria:
But federal employees can be eligible for early retirement if they have reached their MRA and have 10 years of service.
The downside is that those who elect early retirement will have their basic benefit permanently reduced by 5% for each year they retire before age 62. That could be a substantial amount of guaranteed retirement you would forgo.
Further, if you elect the monthly annuity prior to age 62, you are not eligible for a cost-of-living adjustment until you reach age 62. Your first COLA is prorated for the number of months you receive your monthly annuity before December 1. It is annualized each year thereafter.
Also, your basic benefit amount is calculated by using one of two multipliers 1% or 1.1% — based on your retirement age. If you elect to retire prior to age 62, the pension calculation does not change to the higher multiplier of 1.1% when you turn age 62.
Essentially, your pension is permanently 10% lower than if you begin your pension at age 62.
This chart shows how a FERS annuity is impacted by your retirement age:
What Is The Federal Employee Retirement System
The term Federal Employee Retirement System refers to a retirement plan for U.S. federal civilian employees. FERS is a defined-benefit plan that went into effect in 1987 when it replaced the Civil Service Retirement System . Employees are automatically enrolled in the program and receive retirement benefits from three different sources. Benefit eligibility is determined by a worker’s age and the number of years of service. Benefits fall into four different categories, which are explored further down.
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Determining Your Full Pension
Looking ahead to retirement and planning for your future can be fun! When calculating your full FERS retirement benefit, first determine your high-3 salary average figured by taking the three consecutive years of your highest pay. Multiply that by 1.0 percent, then multiply this by the number of years of creditable service:
High-3 average x 0.01 x years
Note that if you have served at least 20 years and plan to retire at age 62 or after, you may use a 1.1 percent multiplier of your high-3 average pay.
How Federal Retirement Eligibility Is Calculated
Like many retirement systems, FERS uses the “Rule of 80.” This states that an employee must reach a combined 80 years when adding age and federal service to be eligible for retirement.
Let’s say an employee begins federal service right after college at age 22. After 29 years of service, they reach age 51. The employee has satisfied the rule of 80, but hasn’t yet reached the minimum retirement age. At an MRA of 57, the employee has six more years left until retirement eligibility.
Assuming this employee wants to retire as soon as they’re eligible to do so, FERS gains six more years of retirement contributions from them and forgoes six years of annuity payments by forcing them to wait until age 57.
Retirement can be tempting at age 51. An employee can decide to do something different and still have enough time left to make a real career out of it. Retirement is still tempting at age 57, but many employees choose to ride out federal service until retiring sometime in their early 60s.
The Social Security Administration allows citizens to take early retirement at age 62, so this is a popular retirement age among public servants at all levels of government as well.
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What Does Early Retirement Mean For Federal Employees
Once you realize that youre looking forward to retirement years before youre actually eligible to retire, working becomes much less exciting. Instead, most of your days are spent counting down to the moment you can retire and collect annuity from the comfort of your own home. Eventually, you begin to consider early retirement.
What if we told you, though, that you may not have to wait as long as you previously thought?
Early retirement for federal employees is an option, though it can come with a cost.
This article will detail the options that are available to you, as well as explain what the potential costs and benefits are.
The Fers Defined Benefit And Early Retirement
According to a report published by the Congressional Research Service, the average voluntary retirement age for federal employees is 63. This is an increase from 30 years ago when the average voluntary retirement age was 61.3. Some federal employees are fortunate enough to leave the workforce early, but this will have advantages and disadvantages. Early retirement can have an impact on your FERS benefits.
Federal employees may have the opportunity to retire early if they have reached the Minimum Retirement Age and have obtained 10 years of creditable service. However, retiring before the age of 62 can lead to the defined benefit being reduced by 5 percent for each year you are under the age of 62 .
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Minimum Fers Federal Retirement Age
The FERS minimum retirement age is age 55-57, depending upon your birth year. Federal employees born before 1948 have the lowest MRA of age 55 while those born in 1970 or later have the highest MRA of age 57.
To receive your full FERS benefits, however, you must meet one of three criteria that takes into consideration both your age and years of service.
Either:
- youve reached your MRA and have 30 years of service or
- youre age 60 and have 20 years of service or
- youre age 62 and have five years of service.
