Micah and Tammy have been seeing lots of mistakes and missteps happening lately, with more people reaching out to see whether they were wrong or...
Read MoreMicah and Tammy have been seeing lots of mistakes and missteps happening lately, with more people reaching out to see whether they were wrong or...
Read MoreWhen we talk about your FERS Retirement, we’re really talking about several different benefits. FERS (Federal Employees Retirement System) has three main components: Basic FERS...
Read MoreSpecial Benefit for Some FERS Who Retire Before Age 62 Have you heard about the FERS Supplement? It’s an important benefit for FERS planning to...
Read MoreFERS retirement benefits are complex. It’s easy to get overwhelmed by all of the details. But it’s important to remember that federal benefits are just...
Read MoreRetirement – which we’ll be discussing here. Another type of Early FERS Retirement is when your agency is going through a RIF – and they offer employees a chance to take an Early Out.
On this page, we’ll be talking about MRA+10 Retirement. But Click here if you want to know more about Early Outs
Special Option for FERS Retirement
FERS have a special option to retire before you meet the regular immediate FERS retirement rules.
To qualify for FERS Early Retirement (MRA+10) you must…
Have reached your Minimum Retirement Age (MRA) …and…
Have at least 10, but not more than 30 years of creditable service
This is a great option to have – but it comes with some serious drawbacks.
What If I Have 30+ Years in Service?
If you have reached your MRA, and have more than 30 years of creditable service, you may be eligible for regular Immediate Retirement. Under regular Immediate FERS Retirement, you will receive 100% of your pension. Click here to learn more about regular immediate FERS Retirement.
FERS Early Retirement is a nice option to have – but it comes with some important drawbacks you should know about:
Let’s say your MRA is 56 years old, and you retire at 56 years old with 10 years of creditable service. And let’s say you had a High-3 of $55,000.
Under the regular FERS pension formula – your pension would be calculated as…
$55,000 x 10 Years x 1% = $5,500/year
……………………………………………or $458/month
But – if you’re taking an Early FERS Retirement under MRA+10 Rules, your pension will be reduced.
The reduction is 5% for each year you are under age 62 when you start your pension. Technically the reduction is calculated by months – it’s 5/12ths of 1% for each month (which still works out to 5% a year). We’re sticking to whole years to make this example easier to understand.
In our example, you’re 56, which is (62-56) 6 years before you will be 62.
So your full pension, before the reduction, was $458/month. 30% of $458 is $137. $458 – $137 = $321/month.
And remember that reduction is *PERMANENT*. You will continue to get $321 a month until you reach age 62, at which point you will qualify for the Cost of Living Adjustment (let’s say the retirement COLA is 2% that year). At age 62, you will now receive $327 a month.
Let’s say you want to do an MRA+10 Early FERS Retirement, but you don’t want to take the permanent reduction to your pension.
You have a couple of options…
#1) Forgive me for being obvious here, you could keep working until you are eligible for regular immediate FERS retirement. For most people in this situation, that would probably be age 62. By age 62 you would likely qualify under regular FERS retirement rules of Age 62 with 5 or more years of service.
But if that’s not an option…
#2) You can separate from service and leave your FERS contributions in the system. Later, you draw your pension when you have reached the age when you can begin receiving your unreduced pension (which for most people in this situation would probably be age 62).
If you separate from service but delay starting your pension – this is called either a Deferred or Postponed Retirement.
There is a *BIG* difference between a Deferred FERS Retirement and a Postponed FERS Retirement. Make sure you understand the difference between a Postponed and Deferred Retirement *before* you separate from service.
Thinking About Early FERS Retirement?
The rules for FERS Retirement can seem overwhelming – but it’s important to understand them before you make any big decisions.
We seen the mistakes that people (and even some professionals!) can make, and we want to help you avoid them. Click the button below to learn more.
✗ Forgetting to check your beneficiary designations
✗ Expecting pension check to arrive in 30 days after retiring
✗ Not knowing the difference between SCD vs. RSCD
✗ Completing retirement paperwork incorrectly
✗ Failing to prepare financially for retirement
✗ Failing to understand tax consequences
✗ Getting bad advice
Click the button below and learn how to avoid these mistakes while planning YOUR retirement
“Hello Micah, I am so glad that I happened onto your website. I have read a lot of material and have watched a lot of podcasts. Because of your solid,
”I have gotten conflicting information about my lump sum annual leave. I plan on retiring on 12/31/21. I know that I will get my lump sum A/L payment a few
“How do I know when it’s worth it to withdraw (refund) my FERS contribution when I leave the Fed workforce? if I have less than 10 years but meet the
“First off, great content on your site! A plethora of information for Federal employees that is extremely invaluable for retirement planning. Regarding the FERS Supplement and VERA, does the supplement
Get the most out of your federal retirement benefits by taking advantage of the FERS resources created by Micah Shilanski, CFP®, and the team of independent financial advisors at Shilanski & Associates, Inc. Join the thousands of federal employees who trust us to guide them in their retirement planning journey because of our unique perspective of how your FERS benefits contribute to your comprehensive financial plan.
Year after year I see Federal Employees missing the same critical concepts in their federal retirement planning. That’s why I’ve created an online workshop to help educate Federal Employees on these critical concepts.
If you are a Financial Advisor looking to work with Federal Employees,
we are always looking for Advisors that want to deliver massive value to clients.
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