Let’s look at two different types of retirement that are open to folks who desire to take a break before finishing their job.
Deferred Annuities
You’ll become eligible for a deferred annuity if you leave the government before meeting the age and service criteria for an instant annuity, have at least five years of creditable civilian service, and do not take a refund of your retirement payments when you depart.
You can get a deferred annuity at various ages under FERS rules: Age 62 with 5 years of creditable service; age 60 with 20 years of creditable service, and at your minimum retirement age with 30 years of creditable service. MRAs span from age 55 to 57, depending on when you were born. Only at the age of 62 will you be eligible for a deferred annuity under CSRS rules.
With just 10 years of service as a FERS employee, you could apply for a deferred annuity at your MRA. Unless you have up to 20 years of service and an annuity starting at age 60, your annuity will be cut by 5% every year (5/12 of 1% every month) if you are under the age of 62 under the MRA+10 provision.
The standard FERS and CSRS calculations are used to calculate deferred annuities. At age 62, you’d start getting annual cost-of-living adjustments (COLAs) under both retirement schemes.
You would not be eligible for the special retirement bonus, which approximates the Social Security income received while covered by FERS, as a FERS deferred retiree.
Finally, whether you are under FERS or CSRS when you leave, you will lose coverage under FEGLI and Federal Employees’ Health Benefits and programs, and you will not be entitled to re-enroll when your annuity begins.
Postponed Annuities
Only FERS workers have access to this. If you retire in accordance with the MRA+10 provisions, you can defer your annuity payment to a later date to avoid or minimize the 5% per year age penalty described above.
The standard FERS calculation will be used to compute your annuity, which will be based on your years of service and high-3 as at the time you retired. You’ll get the amount when your annuity starts, minus any remaining age penalty.
If you were enrolled in the FEGLI and/or FEHB programs for 5 years prior to retirement, you could re-enroll in either or both of them when your annuity starts.
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I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.
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