If you’re covered under the Federal Employee Retirement System (FERS), you can retire relatively young compared to those working in the private sector. To be eligible for an unreduced, immediate annuity, your Minimum Retirement Age (MRA) ranges from 55 to 57, depending on the year you were born.
Before you fill out your retirement application, ask yourself this: will you have enough money to last throughout a 20-to-30-year retirement? If you’re not certain, here are five lucrative reasons to work longer.
1. The 2023 Pay Raise For GS Workers
Starting in January, 2023, over 2-million GS workers received an average 4.6% pay raise. It’s the largest pay increase for civilian federal employees since 2002. With a bump in your pay, working longer will increase the High-3 calculation used to determine your annuity.
2. The 10% FERS Bonus For Working Longer
When a FERS participant waits to retire until at least age 62, with at least 20 years of service, their High-3 is multiplied by 1.1% instead of 1%. This can work out to as much as a 10% raise in your monthly annuity for the rest of your life.
3. Extra Years Of Your TSP Agency Match
Working longer means you can continue contributing to your TSP account and get the 5% agency match. This means you get more free money for working a few extra years while your TSP investment continues to grow.
“Though financial experts predict inflation will stabilize there’s no way of knowing for sure.”
4. Increase Your Social Security Benefit
Since you’re likely earning the most at the end of your federal career, your 2023 pay raise also helps boost your Social Security benefit. Why? Because the amount you receive is based on your highest 35 years of earnings.
5. Protect Against Outliving Your Money
Financial analysts agree that the top risk to retirement is longevity. According to the Social Security Administration, one in four people turning age 65 today will live to age 90. When you work longer and save more you can protect against outliving your money.
Thanks to the COVID-19 pandemic, in 2022 we experienced the highest rate of inflation in four decades. Though financial experts predict inflation will stabilize there’s no way of knowing for sure. You can’t control these types of economic disrupters but you can control how much you save for retirement.
Consider touching base with an FRC® trained advisor who fully understands your federal benefits. Together, you can run the numbers to discover how much more you can save if you work a few years longer.
