Calculating Your Early Retirement

federal workers - Aubrey Lovegrove

Federal workers under the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) are under the same rules for eligibility for voluntary early retirement authority (VERA). You can retire after 20 years of service at age 50, or at any time after 25 years of work.

Those that are under CSRS, your payments will be 2 percent less for each year that you are under 55 if you retire early.

For those that are under FERS, the 5 percent penalty for every year is waived after you retire.

For both retirement systems, the pension amount is calculated with standard formulas.

FERS: .01 x your high-3 x years and full months served.

CSRS: .015 x high-3 x 5 years of service plus .0175 x high-3 x 5 years of service plus .02 x high-3 x the remaining years and months worked.

CSRS retirees will have a cost of living adjustment added every year, no matter when you retired. The cost of living adjustments are added to FERS annuities once the participant is 62 years of age.

Unlike CSRS retirees, FERS retirees are eligible to receive a retirement supplement called the SRS when they reach their minimum retirement age (MRA), which varies from 55 to 57. The MRA is based on the year you were born. The SRS is calculated based on the amount of Social Security benefits you amassed while working. Keep in mind that this will not incorporate credit for active duty service in the military.

The SRS was designed to supplement your income when you retire to when you are qualified for Social Security (age 62). However, there is no cost of living adjustments.

Aside from your pension, another thing you need to think about for retirement is your health care. If you have a minimum of 5 years of continuous coverage under the FEHB or FEGLI program, you can continue it into retirement. The premiums for the plan will be taken out of your pension payments.

Federal Employee setting up pension for retirement

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