According to the latest OPM statistics, the average voluntary retirement age for federal workers is 62.6 years old while the average length of service is 25.4 years. This is likely because FERS participants can get a 10% bonus if they wait until age 62 to retire with at least 20 years or more of service. Then again, deciding when to retire really depends on how much retirement income you can count on, not your age.
Can You Cover Expenses Over A 25-to-30-Year Retirement?
For FERS participants, you can retire as young as 57 with a full annuity as long as you meet your Minimum Age Requirement (MRA) and the required years of creditable service. Though retiring in your 50s is appealing it’s important to consider that retirement can be as long as 25-plus years if longevity runs in your family. In fact, according to the Social Security Administration, one in four people turning age 65 today will live to their 90th birthday.
If a federal worker retires at age 57 and lives to age 90 they’ll need to cover their living expenses for well over 30 years. Before you apply for retirement at your MRA, take the time to calculate how much income you can count on over a long retirement. Otherwise you may run the risk of outliving your money. To find your MRA click here.
“Recently, the Full Retirement Age (FRA), also known as the Normal Retirement Age (NRA), has capped out at age 67 for those born in 1960 or later.”
Congress Is Talking About Raising The Age For Full Social Security Benefits To 70
With current concerns about depleting the Social Security surplus one proposed solution is raising the age for full retirement benefits to 70. Recently, the Full Retirement Age (FRA), also known as the Normal Retirement Age (NRA), has capped out at age 67 for those born in 1960 or later. If the Social Security FRA/NRA is raised to 70, you’ll have an even longer wait to claim 100% of your earned Social Security benefit. You can check your FRA/NRA with this Social Security Calculator.
A 4% Inflation Rate Can More Than Double The Cost Of Living Over 20 Years
When calculating your retirement expenses, experts advise allowing for an inflation rate of 4% yearly. At 4% your cost of living will more than double over 20 years and even more over 30 years. But inflation is only one of the drawbacks if you retire simply because you’ve hit your MRA. If you enter retirement with even a small gap between your income and expenses, your financial future is at risk. Connect with an FRC® trained advisor to learn more about planning a financially-secure retirement.
