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By: Reg JonesLast week we examined issues to consider when deciding whether to retire. Now let’s look at some general considerations for picking a date do it. This will be of most immediate interest to those who are thinking of going out around the end of this year but it also is important information even for those farther away from retirement.
First, a quick review of eligibility rules. To retire, you first need to meet the age and service requirements to do that. For FERS employees, they are:
Age 62 with 5 years of service;
Age 60 with 20 years of service; or
At your minimum retirement age (MRA) with 30 years of service
(MRAs range from 55 to 57 depending on your year of birth)
You can also retire at your MRA with between 10 and 29 years of service; however, your annuity will be reduced by 5 percent for every year (5/12ths of 1 percent per month) that you are under age 62.
For CSRS employees, they are:
Age 62 with 5 years of service;
Age 60 with 20 years of service; or
Age 55 with 30 years of service
You can retire on any day of the week, even on a holiday, and you can do that on any day you like, even in the middle of a pay period. However, there are rules that will govern when your annuity begins. And they are different for FERS and CSRS. Let me explain.
If you are a FERS employee, you must retire no later than the last of the month to be on the annuity roll in the following month. For example, this year you’d have to retire no later than Saturday, December 30 to be entitled to an annuity in January and receive your first annuity payment on February 1. If you missed the end-of-month cut-off date by even a day, your annuity wouldn’t be payable until the following month. In this case, March.
If you are a CSRS employee, you can retire up to the third day of any month and be on the annuity roll in that month. However, your annuity payment for that first month would be reduced by 1/30th for every day you weren’t on the annuity roll. Note: For annuity purposes, OPM divides a year into 12 30-day months. They do that to assure that monthly annuity payments are equal and don’t bob up and down depending on the calendar length of a particular month.
So, now you have it. The rules that govern when an annuity will begin. Next week, I want to help you pick a retirement date that will maximize the dollar value of your retirement.
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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See also,
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