In a time when fewer workers than ever can count on their employers to help provide a comfortable retirement, the federal government continues to offer comprehensive solutions. It’s up to employees, however, to take full advantage of the retirement benefits offered to them. The best way to ensure your golden years are indeed golden is to plan right now.
Determining Retirement Eligibility
There are so many individual factors that go into determining when you’re eligible for retirement, but this will provide a general overview. Most federal employees fall into two categories: Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS). Each has its own set of criteria, though there is some overlap.
- Most CSRS employees can retire at age 55 with 30 years minimum service, age 60 with 20 years of service or age 62 with five years. Some special conditions include:
- Air traffic controllers may opt for retirement at any age, as long as they have at least 25 years of service.
- Fields such as law enforcement and firefighting have their own requirements.
- If you’re forced into non-voluntary retirement because your position or agency service is discontinued (not due to disciplinary action), you can access retirement benefits as long as you have 25 years of service or have 20 years of service and are over age 50.
- If your department or agency has a significant shake-up, you can retire at any age with 25 years of service or at age 50 with 20 years of service—though your annuity will likely be reduced if you’re under age 55.
- If you sustain a disability and have served for five years, you’re eligible for retirement at any age.
The minimum retirement age (MRA) for FERS employees is broken down even further. The MRA for employees born before 1948 is 55, and the MRA for those born after 1970 is 57; the MRA inches up by one or two months for employees born between those years. More specifics for certain populations:
- Employees can get immediate retirement benefits (within 30 days) if you meet MRA with 30 years of service, are age 60 with 20 years or are age 62 with five years. If you meet MRA and have between 10 and 30 years of service, prepare for your annuity to be reduced by 5 percent for each year you are less than 62 years old, except in special circumstances.
- You can still be eligible for a deferred benefit if you leave the government’s employ before you meet all age/years of service criteria. Benefits will begin at the ages/years of service listed in the “immediate” category above.
- On the other end of the spectrum is early retirement, which is an option for employees whose agencies are undergoing a major restructuring or those who are involuntarily separated (not due to disciplinary action). Workers are eligible for early retirement benefits with 25 years of service or at age 50 with 30 years of service.
The time to get serious about retirement is when you are five to seven years away—most importantly because you must have insurance for at least five years before retirement in order to keep it afterward. This period also allows you to research the requirements that apply to you specifically. Your agency is your point of contact for retirement planning, so use this time to go over your service record and determine whether you’ll be eligible for Social Security as well.
Once you’re within a year of retirement, you need to review your Office Personnel Folder in detail to ensure that your service has been documented correctly. If something is incorrect, you need to take steps to rectify the information or risk a reduction in your benefits. You’ll also need to set an exact retirement day, alert your supervisor about your retirement date, confirm your health and life insurance coverage and investigate potentially valuable entitlements (based on years of service) that will make up your retirement income.
Picking the Right Day to Retire
When approaching retirement, most people are so caught up in the sheer joy of freedom after decades of alarm clocks that they don’t stop to consider that working a few more months—or even days—can make a difference in their retirement package. Here are a few factors to consider when picking your official retirement day.
- When does your leave year end? Retiring at the end of the leave year usually translates into a larger lump sum payment for accrued hours that you haven’t used. This is especially true if part of your hours will be paid at a higher rate due to a scheduled employee raise. Meaning, if a pay raise kicks in April 15 and you retire April 1, your accrued hours will be paid at your regular rate for two weeks and then at the increased rate for every day you’re owed after that.
- When does your pay period end? Waiting until the end of a pay period allows more leave time and sick time to pile up—the former will be paid to you in a lump sum, while the latter counts toward your service time and, hence, may increase your annuity.
- When does your annuity start? FERS annuities begin the first of the month, so it makes sense for these employees to retire on the last day of the month. Retirement on March 1, for example, means that your first annuity won’t be paid until May 1. You’ll receive the annuity a full month earlier simply by retiring February 28 instead.
- When can you claim credit for days worked? Creditable service is calculated only in whole months. So if you retire on May 24, you won’t get credit for working those 24 days in May. Work one more week, and you’ll add an entire month to your service record.
Rather than choosing a day at random or retiring on a celebratory day like your birthday, take the time to find out which day is most beneficial to you. Some of the tips above may contradict each other, depending on your unique situation, so run the numbers to see which suggestions pay off best for you.