Immediate Retirement

Last time I wrote about immediate retirement under CSRS and CSRS Offset. This time I want to talk about the rules for those of you who are covered by FERS.

If you are FERS-covered employee, you can retire voluntarily on an immediate annuity if you meet the following age and service requirements: 62 with 5, 60 with 20, at your minimum retirement age (MRA) with 30 or at your MRA with 10, but with a 5 percent reduction in your annuity for every year you are under age 62 (or 5/12 percent per month), unless you have 20 years of service and your annuity begins at age 60 or later.

Here’s the basic formula used to calculate your annuity: 0.01 x your high-3 x years of service. The first multiplier is changed to 0.011 if you retire at age 62 with at least 20 years of FERS service.

The rules for special category employees, such as law enforcement officers, firefighters and air traffic controllers are different. You can retire at age 50 with 20 years of covered service or at any age with 25. Your annuity will be computed using this formula: 0.17 x your high-3 x 20 years of covered service, plus 0.01 times all additional years of service.

Unlike CSRS, you won’t get any credit for active duty service in the military unless you make a deposit for that time.

If you retire on an immediate annuity under FERS, you will be eligible for a special retirement supplement that approximates the Social Security benefit you earned while covered by FERS. That benefit is payable until age 62 unless you exceed the Social Security earnings limit, in which case the SRS will be reduced or suspended. Note: If you are a special category employee who retires before reaching your MRA – which ranges between 55 and 57, depending on your year of birth – you will not be subject to the Social Security earnings limit until you reach your MRA.

As a rule, FERS retirees don’t receive a cost-of-living adjustment until they reach age 62; however, special category retirees will, regardless of the age at which they retire. On the other hand, SRSs are never increased by COLAs.

Note: If you had at least five years of service under CSRS before being covered by FERS, you will have a CSRS component in your annuity. That portion will be computed using the standard CSRS formula. It will also be increased by annual COLAs, regardless of the age at which you retire.