How do you achieve retirement dreams and get an income that you can’t outlive in retirement? Micah is flying solo in today’s podcast to answer...
Read MoreHow do you achieve retirement dreams and get an income that you can’t outlive in retirement? Micah is flying solo in today’s podcast to answer...
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 MoreMinimum Retirement Age is a threshold that was created for FERS and CSRS to determine a federal employee’s eligibility for retirement. Depending on the year someone is born, the MRA for that person can range between ages 55 and 57. In addition to age, a federal employee’s years of service also determine retirement eligibility.
Below is the chart used by OPM to determine a federal employee’s Minimum Retirement Age:
If you were born | Your MRA is |
Before 1948 | 55 |
In 1948 | 55 and 2 months |
In 1949 | 55 and 4 months |
In 1950 | 55 and 6 months |
In 1951 | 55 and 8 months |
In 1952 | 55 and 10 months |
In 1953-1964 | 56 |
In 1965 | 56 and 2 months |
In 1966 | 56 and 4 months |
In 1967 | 56 and 6 months |
In 1968 | 56 and 8 months |
In 1969 | 56 and 10 months |
In 1970 and after | 57 |
For those who’s MRA falls on an age expressed in years and months, you simply take your date of birth and add the number of years as well as however many months to it to find your MRA date.
The earliest age that a person can start taking their Social Security is age 62. They can delay their withdrawals up to age 70, and by doing so, increase the monthly annuity that they receive.
For those federal employees who retire before 62, the FERS has a supplement of additional income to help bridge the gap from retirement to age 62. This is known as the Special Retirement Supplement, or simply the FERS Supplement.
In order to be eligible to receive the FERS Supplement, you have to retire under one of the following rules:
So let’s say that Bob has been working as a federal employee for 31 years and decides to retire when he’s 58. Because he met one of the rules listed above (retire at MRA with 30 years or more of service), he’ll start to receive the FERS Supplement along with his regular pension amount.
Once Bob turns 62, the FERS Supplement will turn off and he’ll only be receiving the regular pension. This is true even if Bob decides he doesn’t want to take his Social Security yet.
In the example above with Bob now being 62 and eligible for Social Security, why would he not start taking his Social Security now? By delaying his Social Security payments, Bob’s payments will atomically increase every single year until his age 70, which is the latest he can delay it. Bob will have to live on money from other accounts that he has in replacement of the FERS Supplement, or he might not even need the money at all if his FERS pension is enough.
Very few things in finance are guaranteed to grow. While we do not know how the future of Social Security will play out, the way the rules are written today would make us recommend more often than not to delay Social Security until 70 if our clients can afford to wait. It also depends on the health of the client as well, as life expectancy will play a role in the decision making process.
Sources:
https://www.opm.gov/retirement-services/fers-information/types-of-retirement/#MRA2
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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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7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
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7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.