As mentioned in a previous post, there are different retirements under FERS and they each have their own set of qualifications for eligibility. Voluntary retirement is the first type of retirement we will look at. This is generally what you think of when you think about retirement.
Voluntary retirement is based on your age and your years of creditable service. If you meet one of the following sets of requirements, you may be eligible for a voluntary retirement benefit:
- 62 years of age plus 5 years of service,
- 60 years of age plus 20 years of service or,
- MRA plus 30 years of service.
Your immediate annuity starts within 30 days of your separation.
For most people, this is the type of retirement you think of when you hear the word ‘retirement’. However, the following are a few cases where the eligibility requirements vary.
This is a type of voluntary retirement where you agree to work on a part-time basis while receiving a portion of your annuity for the time you are not working. This retirement was designed to aid in the mentoring and training of employees who will be taking over your position.
You must be employed on a full-time basis for at least three years prior to entering into phased retirement status. You must come to a mutual agreement with your employing agency and meet specific age and service requirements. Those requirements include:
- CSRS employees must have 30 years of service and be at least 55 years of age, or have 20 years of service and be 60 years of age.
- FERS employees must have at least 30 years of service and have attained at least MRA, or have at least 20 years of service and be 60 years of age.
Working this part-time schedule will allow you to earn half of your annual salary while receiving your annuity, which is equal to a fraction of the annuity that would’ve been paid had you fully retired. You would still be considered as a full-time employee for FEHB and FEGLI purposes, and you will still continue to accrue annual sick and leave time at the rate of regular part-time employees. However, under this specific type of retirement, you would not be allowed to file for disability retirement. The amount of time you are on a phased retirement can be open-ended or upon an agreed time limit with your agency. You would also be able to return to regular employment or request a full retirement.
MRA + 10 retirement also known as Early Retirement
This type of voluntary retirement has something called an age reduction. It means that if you have 10 or more years of creditable service, and are retiring at your MRA, your annuity will be reduced for each month that you’re under 62. The reduction is 5% a year (or 5/12% per month). However, this reduction does not occur if you have completed at least 30 years of service, or if you have completed 20 years of service and your annuity begins when you reach 60.
You may be able to reduce or eliminate this age reduction if you choose to have your annuity begin at a later date than your MRA. The date chosen can only be between your MRA and 2 days before your 62nd birthday.
If you choose to postpone your annuity to avoid age reduction, be aware of the following:
- Life Insurance: You cannot continue your life insurance coverage if you are not receiving an annuity. Therefore, if you postpone the beginning date of your annuity, your life insurance enrollment will end. When your annuity does begin, and you meet all the usual requirements for continuing coverage into retirement, the life insurance you had when separated will resume.
- Health Insurance: You will be eligible to temporarily continue your health coverage for 18 months from the date of separation, provided you must contact your employing agency within 60 days and pay the total premiums, plus a 2% administrative charge. When your annuity payments begin, if you had FEHB coverage for the 5 years of service right before you separated, you will have the opportunity to enroll in health benefits under the FEHB program and the OPM will pay the government share of the premium.
- Long Term Care Insurance: Your coverage will continue as long as you continue to pay the premiums. If you’re not enrolled in LTC when you separate for retirement, you can apply for enrollment anytime, even if you postpone your annuity.
- COLA’s: Your annuity will not include any Cost of Living Adjustments (COLA’s) that occur before you begin to receive your annuity payments. Once your annuity begins, however, you can receive COLA’s under FERS at age 62.
While the retirements mentioned above are voluntary, there are still specific guidelines and qualifications for each. Knowing what these are can help you make an informed decision about your future. Next, we’ll discuss deferred retirement.