Looking to Retire Early Under FERS? Here Are Some Tips
FERS workers who wish to have an immediate annuity will need any of these age and years of service combinations:
- Minimum of 62 years of age + five years of service
- Minimum of 60 years of age + twenty years of service
- MRA + thirty years of service
- MRA + not less than ten years of service
Minimum retirement age (MRA) varies from worker to worker based on the year of birth. Some workers will reach their MRA at 55, while others will reach it at 57. The earlier a worker’s year of birth, the earlier their MRA. For workers born in 1965 and below, there will be the usual two monthly increases. So for those born in 1965, their MRA in 2021 will be 56 years two months. The two monthly increases will continue until it reaches 57 years for those in that age bracket.
The last option is a special provision. The MRA+10 requirement comes with a special clause. After ten years of service, workers who opt to retire at the minimum retirement age will have to bear a 5% yearly reduction of their retirement benefits every year until they are 62 years old. To avoid or decrease the reduction, such workers have to suspend receiving their annuities.
Voluntary Early Retirement Authority (VERA)
Some agencies offer FERS federal workers the chance to retire earlier than stated above. Under VERA, retirement age and years of service combination is as follows:
• Minimum of 50 years of age + twenty years of service
• Leave service anytime after putting in a minimum of twenty-five years
Under VERA, there is no reduction in benefits for workers who retire before the minimum retirement age.
After retirement, FERS Feds will benefit from pension payments, Social Security, and their government-supported TSPs (Thrift Savings Plans). For workers who wish to take either the second or third option listed above, the government will provide a Special Retirement Supplement (SRS) since they are not eligible for Social Security benefits yet.
The supplement, which approximates a worker’s Social Security benefits while they are in service, is also available for workers who get a VERA. The only difference is that individuals who get a VERA will only access the supplemental funds when they reach their MRA.
Retirees will continue to receive the supplemental benefits until they are 62 years of age and can start receiving their Social Security funds. However, workers who earn funds greater than their Social Security benefits from other sources, such as a self-owned business, will receive only a fraction or no part of their SRS.
As against the system under CSRS, cost-of-living-adjustments (COLAs) will not reflect in FERS pension payments until a worker is 62 years of age. SRS funds will also not get any incremental increases. Lastly, for Feds opting for the MRA+10 provision, it is best to suspend receiving pensions to avoid reductions. Also, workers in this category will start receiving their SRS if their annuity payments’ suspension ends before they are age 62.
