Deciding on when to retire from your federal career is a huge decision that can affect the amount of the monthly FERS pension (annuity) for the rest of your life. As you approach your 20th year of service it’s time to compare your retirement options.
Retire At Age 60 With At Least 20 Years Of Creditable Service
At age 60 you’re eligible to receive your full, unreduced FERS annuity (pension) when you have at least 20 years of creditable service. Creditable service is work during which your pay was subject to deductions for your FERS retirement. When you choose this option, you’re also eligible for the FERS Special Retirement Supplement (SRS).
What Is The FERS SRS?
The FERS Special Retirement Supplement (SRS) fills the gap between age 60 and age 62, which is when you’re first eligible for Social Security. The OPM estimates what your Social Security benefit would be based on your Full Retirement Age (FRA) under Social Security rules. Then they calculate the amount of your service and reduce the estimated full-career Social Security benefit accordingly.
FERS SRS: The Downside
- When calculating your SRS, the OPM does not include years of active duty even if you’ve paid a deposit to get credit.
- Under FERS rules, retirees don’t receive COLAs until they turn age 62.
- Your SRS is subject to the Social Security Earnings Test if you work after retiring.
When your SRS stops at age 62, you can file for Social Security early and receive a reduced benefit; wait until your FRA for your full benefit; or delay until age 70 to maximize your benefit.
Retire At Age 62 Or Older With At Least 20 Years Of Creditable Service
If you wait to retire at age 62 or older with a minimum of 20 years of creditable service, you’re eligible to receive the FERS 10% Bonus. Instead of calculating your annuity (pension) using the standard 1% formula, the OPM uses the 1.1% formula. This works out to a 10% increase in your FERS pension for the rest of your life.
Other Advantages Of Working Until Age 62
Working until age 62 gives you more years of creditable service when the OPM calculates your annuity (pension). Pay raises during the extra years can increase your High-3 salary and give your pension another bump. You’ll also have more time to contribute to your Thrift Savings Plan (TSP), make catch-up contributions, and get your 5% agency match. And you can accrue more unused sick leave that can be added to your years of creditable service plus more unused annual leave for a larger lump-sum payment at retirement.
Choosing the best option comes down to the math. Connect with an FRC® trained advisor who can help you crunch the numbers before you decide.
