When retiring early under FERS, you have two choices: a Deferred Retirement or a Postponed Retirement. With a Deferred Retirement you separate from service now and start your FERS pension later at a specific age. Then again, depending on your age and creditable years of service, you may be eligible for a Postponed Retirement.
What’s The Big Difference Between The Two?
The big difference between a Deferred and Postponed retirement is that you’re eligible to re-apply for FEHB in retirement with one but not the other. Keeping FEHB in retirement is a valuable benefit. The federal government continues to pay the same portion of your overall premium as it did when you were working — up to 75% percent, forever.
With A FERS Deferred Retirement You Lose FEHB Coverage
To be eligible for a Deferred Retirement, there are only two requirements:
- You must have at least 5 years of creditable service in a FERS covered position,
- AND you must keep all of your contributions in the FERS system.
Though choosing a Deferred Retirement enables you to collect your FERS annuity with fewer years of service, it’s important to calculate the downside: losing FEHB in retirement. Otherwise, when you turn 65, your only options for healthcare insurance are likely to be traditional Medicare with a gap insurance plan or Medicare Advantage. And premiums are paid entirely by you.
“If you’re close to meeting your MRA+10, it may be worth considering working longer when you weigh the advantages.”
With A FERS Postponed Retirement You Can Continue FEHB In Retirement
To be eligible for a postponed retirement, also known as MRA+10, there are three requirements:
- You must have 10 years of creditable service in a FERS covered position,
- AND you must have reached your minimum retirement age (MRA) before leaving your position,
- AND you must keep all of your contributions in the FERS system.
If you’re close to meeting your MRA+10, it may be worth considering working longer when you weigh the advantages. With a Postponed Retirement you can maximize your FERS annuity by holding off on collecting payments until you reach the age at which you would have been eligible for your full benefit.
Even more importantly — with a Postponed Retirement, you remain eligible for FEHB when you retire. Though you can’t keep FEHB coverage when you stop working, you can reinstate FEHB when you apply for your FERS annuity benefit.
Before making a final decision, meet with an FRC® trained advisor in your area who can help you weigh the pros and cons of choosing an early retirement option.
