Everyone looks forward to retirement, and for some, it may not be that far off. Working in the federal government, you have a few retirement options available to you, each with different age and service requirements. However, if you are worried about reaching your age and service requirements due to a disability, there is a benefit hidden in your FERS package called Federal Disability Retirement that would allow you to retire NOW.
Retirement can be a great time to relax and enjoy life. But before you decide to retire, it’s important to understand the different retirement options available to you. In this article we will cover the main retirement options that may be available to you, to help you better plan for your future.
Immediate Retirement Options
If you have been working for the federal government for a while and are looking to retire, you may be eligible for immediate retirement. There are three main immediate retirement options from the federal government:
- Minimum Retirement Age (MRA) +30 Years of Service
- Age 60 with 20 Years of Service
- Age 62 with 5 Years of Service
If you choose any of these options, you will receive an immediate full annuity. Your annuity will be calculated using your high 3 average and your creditable years of service. If you have more than 20 years of service at retirement, you will receive 1.1% of your high 3 average for every year of service. If you have less than 20 years, you will receive 1% of your high 3 average for every year of service.
Your minimum retirement age is based on the year you were born. You can find your MRA on this chart from the OPM:
Early Retirement Options
If you are looking to retire early from your federal position, there are a few early retirement options from the federal government, each with its own differences. Choosing to retire early is a big decision and it’s often hard to figure out what the best choice for you and your family is.
MRA +10
The main early retirement option is an MRA +10 retirement. You will be eligible for this if you have hit your minimum retirement age (MRA) and have 10 years of federal service. If you retire under the MRA+10 provision, your annuity will be reduced by 5% per year that you are under age 62. You can choose to defer your annuity in order to reduce or eliminate this age reduction. However, be aware that if you do this you will no longer have access to your insurance options until your annuity begins.
Early Voluntary Retirement Authority (VERA)
Another early retirement option is an Early Voluntary Retirement Authority (VERA). This type of retirement lowers the retirement age for agencies undergoing a major reorganization, reduction-in-force or transfer of function. Employees at least 50 years of age with 20 years of creditable service or any age with 25 years of creditable service are eligible for this type of retirement. Employees considering an early voluntary retirement must consult with their human resources office and follow agency procedures to receive an annuity and benefit estimate and obtain advice specific to their personal situation. But the good news is there may be no annuity reduction in FERS for employees who retire on an early voluntary retirement under age 55.
Federal Disability Retirement
If you are looking into early retirement options due to a disability, then Federal Disability Retirement may be the best choice for your future. Federal Disability Retirement would allow you to retire immediately while receiving a monthly annuity until you turn age 62. At age 62, you will receive your regular retirement annuity. This is a great benefit if you have a medical condition that is preventing you from fully performing your job, and it allows you to maintain your retirement benefits.
Struggling in your job with a disability can be hard, and Federal Disability Retirement provides you with peace of mind knowing that your benefits are secure. If you are struggling in your federal position, contact our firm to see if you qualify!
You must be a FERS career federal employee, with 18 months of creditable service, and a disability that is affecting your ability to perform at least one of the essential functions of your job in order to be eligible for this benefit.
Both MRA +10 and Federal Disability Retirement are great options for early retirement from the government. Which option is best for you depends on your specific situation and plans for retirement.
Benefit Highlights
As you can see, early retirement does not have to mean a financial setback. Federal Disability Retirement offers four main benefits that will allow you to reach your full retirement age of 62.
Secure Monthly Annuity
While on Federal Disability Retirement you will receive a secure monthly annuity based on your high 3 average. The first year after approval you will receive 60% of your high 3 average and every year after that you will receive 40% of your high 3. Your high 3 average is the average of your highest three consecutive years of basic pay, this will be calculated by the OPM.
Creditable Years of Service
You will continue to receive creditable years of service every year you are on Federal Disability Retirement. This can have a huge impact on your regular retirement annuity which is based off your high 3 average and your creditable years of service.
Health and Life Insurance
You will be able to maintain your health and life insurance while on Federal Disability Retirement if you have been covered for at least 5 years or during all your service if less than 5 years. This can significantly help with the medical costs associated with a disability.
Work in the Private Sector
While on Federal Disability Retirement and receiving your secure monthly annuity, you will be able to work in the private sector and earn income on top of your annuity. The OPM sets an earned income limit at 80% of your previous position’s current salary, but this still allows you to earn more than what you were making in your federal position alone.
Special Provisions Retirement
If you are in a special provisions position, like a federal law enforcement officer, air traffic controller, or federal firefighter, your retirement requirements will differ slightly. Special provisions positions are considered high-risk positions and therefore receive a higher retirement calculation and mandatory retirement ages.
Special provisions employees have a mandatory retirement age of 56 or 57 and can retire at age 50 with 20 years of service or any age with 25 years of service.
Your special provisions retirement will be calculated at 1.7% of your high 3 average for your first 20 years of service, and 1% of your high 3 average for any years after 20.
Retirement can be an exciting time, it’s a chance to start a new life or even find a new passion. But it’s also important to financially plan for retirement in order to be prepared for anything life throws your way.
Retiring from the federal government doesn’t have to be complicated. There are a few options available that will allow you to retire and start a new chapter in your life. For more information on these retirement options, please contact our firm at 877-226-2723 or schedule a FREE consultation today to see if you qualify.
