So much of the focus on retiring from the federal government is on numbers that one could easily conclude that nothing else matters.
Under both the FERS and CSRS retirement programs, an employee is eligible to retire voluntarily when meeting one of a number of possible combinations of age and years of service. There are separate rules regarding retiring with an early-out offer or due to disability.
Many federal employees know the day they’ll meet the first of those combinations well in advance, and some spend the runup to that date literally counting down the years, and then the months—and meanwhile holding out hope for an early-out that would shorten the count.
And yet. About 15 percent of federal employees already are eligible to retire but remain on the job. An OPM study—done a decade ago but there’s no reason to think the pattern has changed—found that less than a fifth of employees retire within their first year of eligibility.
Those are the early adopters—the people who have told you their retirement plans so often that you know them as well as they do. After that there’s a steady increase each year but even after five years of their first eligibility, almost half of federal employees are still working, and even after 10 years nearly a quarter.
Clearly there’s something other than numbers at work here. Apart from a few occupations such as law enforcement where there are mandatory retirement requirements, federal employee retirement is voluntary. So why do people choose to do it at one time or another.
A quick answer is that they may not be financially ready or able to retire. That was reflected, for example, in the downturn in retirements following the 2008 financial crisis that eroded the value of TSP and other investments in stocks. It took several years afterward for retirements to return to their prior level.
Other personal factors also play a role, as a recent study by the Congressional Research Service found.
That study focused on trends in the Social Security program, where covered persons—including those under FERS and some under CSRS (through other employment)—can choose to begin drawing benefits at differing ages, starting at 62. However, there is a phased-in benefit reduction in monthly benefits for starting before “full” retirement age—currently 66 and four months—but meanwhile there’s a phased-in add-on for waiting to begin until after that age up to age 70 when the maximum possible monthly benefit is reached.
In a look at trends in claiming over time, the CRS found as might be expected that raising the full retirement age from its original 65 resulted in fewer people claiming benefits at age 62 because the reduction in benefits became more severe. Fewer people also claimed at age 65 since they no longer would receive full benefits at that age, and there was a roughly equal increase in those claiming at age 66.
The study naturally concluded that policy affects behavior. But it said that awareness of how the policy works also contributes. For example, it said, a prior study found claiming at earlier ages reduced after Social Security began producing estimates of individual benefits, which showed how doing so eroded monthly benefits.
It added: “Further, some studies suggest that couples like to retire together, and because husbands tend to be older than their wives on average, the increased labor force participation of women since the 1960s may lead to later retirement of men.”
“Researchers have also shown that peers at the workplace or those closest in age tend to have an impact on individual retirement decisions, so policies that encourage later retirement spill over” to others, it said.
By all means, know your earliest possible federal retirement date. Just realize that—for a variety of potential reasons, possible including some you can’t envision at present—the odds are that you won’t retire that day.