What You Need To Know About The FERS 10% Bonus
If you’re thinking about working longer than your Minimum Retirement Age (MRA), you may want to consider pushing your retirement to age 62. Why? Because this is when you’re eligible for the FERS 10% Bonus if you have at least 20 years of creditable service.
How The FERS 10% Bonus Works At Age 62
Let’s say you’re eligible for an immediate pension at age 60 with 20 years of service. When you apply for retirement, your FERS annuity (pension) is calculated using the standard 1% formula. For regular workers, your High-3 salary would be multiplied by 1% then multiplied by your 20 years of creditable service.
However, if you wait just two more years until you turn age 62, your annuity is calculated with the 1.1% formula. When you do the math, it works out to a 10% increase in your FERS pension for the rest of your life.
“If your retirement runs several years longer than you originally planned, will you have enough money to live comfortably?
More Advantages When You Retire At Age 62
- Working longer means you’ll have more years of creditable service and your pension will be even higher.
- Pay raises during the extra years can increase your High-3 salary and give your pension another bump.
- Working a few extra years at your full salary gives you more time to contribute to your Thrift Savings Plan (TSP), make Catch-Up Contributions, and get your 5% agency match.
- During the extra years, you’ll likely accrue more Unused Sick Leave that can be added to your years of creditable service for an even higher pension.
- And you’ll likely accrue more Unused Annual Leave which means you’ll get a larger lump-sum payment when you separate from service.
Add to this, age 62 is when FERS retirees first become eligible for Cost Of Living Adjustments (COLAs). That’s right – you don’t receive COLAs on your FERS pension if you retire younger than age 62.
A Bigger Nest Egg For A Longer Retirement
According to the Social Security Administration, one in four people turning age 65 today will live to age 90. If your retirement runs several years longer than you originally planned, will you have enough money to live comfortably? Think about it — working just a few years beyond your MRA can generate a bigger annuity and a larger TSP nest egg.
Get in touch with an FRC® trained advisor who fully understands your federal benefits. Together, you can crunch the numbers to discover how the FERS 10% Bonus at age 62 helps protect you against running out of money in your golden years.
