Should You Retire at 60 or Wait Until 62?

Micah Shilanski  00:00

You separated from Federal Service on a Deferred or Postponed retirement. If you ever wondered when you should turn your pension on, or should you wait to make your pension larger into retirement, then stay tuned for this, FERS Federal Fact Check. Hi, I’m Micah Shilanski, with Plan Your Federal Retirement. Today, we have a really good question that came in from Donald about a combination of Civilian Service, Military Service, Postponed retirement, and does it make sense in order to postpone even further turning your pension on to get a higher amount in the future? So let’s take a look at what Donald’s asking. Hi at 57 in two months, I separated from federal service of a civilian job after about 5.3 years, and I bought back 17.2 years of military time. I currently have a good civilian job planning and continue to work until at least 62 they’ll turn 59 in March. My question is, should I apply for a Postponed retirement at 60 so I qualify for FEHB, or should I continue to wait until age 62 to receive a higher percentage of my high three. Another consideration is he will be eligible for TRICARE at 60, thank you very much. Donald, that is a great question. Now there’s a little nugget you stuck in there, so it sounds like you’re really keen on these benefits, which I love. It says, should I apply at 60, so I’m eligible for FEHB? That implies to me that, Donald, you’re aware that if you don’t apply at the correct time for your Postpone retirement, you will lose your FEHB for the rest of your life, so be really careful that we have a whole special thing on Postponed versus Deferred retirement, so I’m not going to go to a lot of the details here, but dates really do matter in how you fill out this application, so the question is, should you apply at 60 should you wait till 62? Well, Donald, let’s take a look at the math together, rounding yet about 5.3 years of civilian time, you have 17.2 looks like he’s a military time, so you stay just enough in civilian time to buy the Military time back, smart man, if I add those together, you have to, I’m looking at my notes, forgive me, 23.5 years of service, so that’s 23.5% roughly, if your high three was $100,000 you’d have $23,500 a year, divided by 12 round down, you’re looking at $1,958 a month, gross as what your pension could be. Now that’s because you have this period of time, but if you waited two years, is your at 60 right? But if you wait two years to 62 is your pension higher? No, it is not. The maximum pension you’re going to receive, unless you go back to service, is $1,958 a month, or based on 23.5 years of time, times your high three just because you delay, your pension doesn’t go up. This is not like Social Security. Social Security, you have a window to apply in, and the longer you wait, the higher your benefit is going to be, that is not the case with your first pension. So number one on the dollar side, I would absolutely say, apply at 60 as soon as you’re eligible without penalty, let’s have that pension coming in, and you’re going to be eligible for FEHB for the rest of your life. I think this is a huge benefit. Donald, please go ahead and take a look at our Postpone versus Defered series if you haven’t already, or if you’re going to be doing a deferred retirement or postpone, take a peek at that series, understand how to fill out that application, this is the one I get up on my soapbox, because there’s irreversible mistakes, if you fill that application out incorrectly. If you have questions like this, then make sure you give us a call or submit something on our website and you can be featured in the next FERS Federal Fact Check. Till then, Happy Planning!