A career in the federal government comes with many perks, but retirement benefits are often at the top of the list. Federal retirement packages are among the best in the nation, yet retirement planning can be complex. Decisions made now can have lasting impacts on your financial future.
Choosing the Right Retirement Age
Unlike the private sector, there’s no universal retirement age for federal employees. Under FERS (Federal Employees Retirement System), you must reach your Minimum Retirement Age (MRA)—determined by your birth year—and meet the required years of creditable service to qualify for an immediate pension.
Calculating your creditable service is not always straightforward. Your Service Computation Date (SCD) is primarily used to calculate leave, not your retirement service. An error in calculating creditable service can reduce your monthly annuity, so careful attention is essential.
Meeting the FEHB 5-Year Rule
Most full-time federal employees easily meet the 5-year rule for the Federal Employees Health Benefits (FEHB) program. However, married employees who are also covered under a spouse’s private-sector plan may need to check their status before retirement. Failing to meet the 5-year requirement could mean losing FEHB coverage permanently, a costly loss since the government pays up to 75% of premiums for life.
Selecting a Survivor Benefit
Under FERS, you can provide your spouse with either:
- 50% of your base annuity (full survivor benefit)
- 25% of your base annuity (partial survivor benefit)
Choosing a full survivor benefit reduces your pension by 10%, while a partial benefit reduces it by 5%. If you opt for a partial or no survivor benefit, your spouse must provide written consent. To maintain FEHB coverage for your spouse after your death, you must elect either a full or partial survivor benefit.
Other Key Retirement Planning Decisions
Federal employees also face decisions that can significantly affect their financial security:
- Choosing between the FERS Supplement or a FERS 10% Bonus
- Developing a Thrift Savings Plan (TSP) withdrawal strategy
- Making choices about FEHB insurance, long-term care, and other benefits
Since OPM cannot provide personalized retirement advice, it may be wise to speak with a Federal Retirement Consultant (FRC®) who specializes in federal benefits and can guide you through these critical decisions.
