At some point, most federal employees end up asking these two important questions: when can I retire, and how much money will I need?
They sound straightforward. They are anything but.
When You Can Retire
Under FERS, retirement eligibility is determined by a combination of your age and your years of creditable service. The most common milestones are:
- Your Minimum Retirement Age with at least 30 years of service
- Age 60 with at least 20 years of service
- Age 62 with at least 5 years of service
Your MRA falls between 55 and 57, depending on your birth year. Reaching it with at least 10 years of service also makes you eligible under MRA+10, though that comes with a permanent reduction in your annuity unless you postpone your retirement to a later date.
Knowing which category you fall into tells you when you’re eligible. It doesn’t tell you whether you’re ready.
When You’re Ready
Readiness is a different calculation entirely, and it’s one that looks different for every person.
How much income will you need in retirement? Most financial planners suggest replacing 70 to 90 percent of your pre-retirement income, but that number shifts depending on your lifestyle, your debt, your health, and whether you plan to work part-time after leaving federal service.
Where will that income come from? For federal employees the answer typically involves three streams — your FERS annuity, your TSP, and Social Security. How those three sources are coordinated, and when each one is activated, has a significant impact on your total lifetime income. Claiming Social Security too early, for instance, can permanently reduce your benefit. Drawing down your TSP too quickly can leave you exposed later.
What happens to your health insurance? FEHB can continue into retirement, but only if you’ve been continuously enrolled for the five years immediately preceding your retirement date. If you leave federal service before you’re eligible and lose that continuous enrollment, your ability to carry FEHB into retirement may be at risk.
Have you accounted for inflation? A retirement that looks comfortable at 62 may feel very different at 75 if your income isn’t keeping pace with rising costs.
The Gap Between Eligible And Ready
For many federal employees, especially those facing an earlier-than-expected separation, the gap between being able to retire and being ready to retire is where the real work happens. The eligibility question has a relatively clean answer. The readiness question requires looking at your complete financial picture: your income sources, your expenses, your timeline, and the decisions you still have time to make.
Being eligible to retire is a milestone worth reaching. Being ready is what makes it sustainable. A Federal Retirement Consultant (FRC®)can help you understand both and close the gap between the two.
