Hardly a day goes by without federal employees asking me if they should accept their agency’s offer of early retirement. Even though they aren’t sure about the pluses and minuses, they know that there’s got to be more to the decision than how much they’ll get in their annuity if they accept it.

Obviously, finding out how much your annuity would be is central to that decision. And you can figure that out using the basic formulas that apply to most employees in each retirement system. So, here they are:

CSRS: .015 x your high-3 x 5 years, plus
.0175 x your high-3 x 5 years, plus
.02 x your high-3 x all remaining years and full months of service

FERS: .01 x your high-3 x all years and full months of service
(.011, if you retire at age 62 or later with at least 20 years of service)

Once you have that number you need to add any other sources of income, including Social Security (not only if you’ll be entitled to it but when it makes the most sense to take it) and investments including the Thrift Savings Plan and other savings.

Then ask yourself this question. Will that be enough to not only let you cover your day-to-day expenses but also to do the things you want to do in retirement–not just now but for the rest of your life? Or will you have to go back to work to make ends meet?

That’s not a silly question. Life expectancies have lengthened to the point that many people are spending as many years in retirement as they did working. Therefore, you need to consider the long-term financial implications of retiring. Costs go up as time goes by. The good news is this. With rare exception, your annuity will be increased by annual cost-of-living adjustments (COLAs) when you are eligible for them. And, if you’re entitled to a Social Security benefit, it will be increased annually by the same percentage. However, these adjustments are made after the cost of living has gone up. So, you’re always playing catch up.

Up to this point, I’ve focused on the financial end of things. However, there’s more to making a retirement decision than whether you can afford to retire. You also need to decide if you are ready to retire. It’s not enough to be happy about leaving your current job. You should be excited by what you’re going to do next. Most of us are defined by what we do. We feel proud when we say “I’m a (fill in the blank).” How proud will you be to say “I’m a retiree”?

Your job has not only provided you with an identity but it has given some structure to your life. When you retire, those two props will be gone. And they will need to be replaced – by another job, a hobby, volunteer work, etc.

One last question. Will you be able to carry your health insurance into retirement? Scared you, didn’t I? Relax. You absolutely will if you are currently enrolled in the Federal Employees Health Benefits (FEHB) program (and have been for the five years immediately preceding your retirement), you can continue that coverage when you retire. Almost everyone who retires from the federal government meets that criterion. If you happen to be one of the few who won’t, the good news for early retirees is that the five year rule will be waived.

Is early retirement for you? That’s a decision you’ll have to make if the opportunity arises. If an offer comes your way, look before you leap. It may be just what the doctor ordered. Or it may not.