Much is made of how the federal retirement systems cause federal employees to determine their first retirement eligibility date, often starting early in their careers, because the combinations of age and years of service are right there in front of them from Day One. To listen to the lunchroom chatter, one would think that the large majority of federal workers will go through and retire on that date.
That’s not what happens in the real world, however. You may retire earlier. But chances are far stronger that you will retire later—possibly much later.
First, a quick refresher on retirement eligibility. Under both CSRS and FERS, voluntary retirement is allowed at or after age 62 with at least five years of service, age 60 with 20, or with 30 years, age 55 for CSRS or the “minimum retirement age” (currently 56) for FERS. (FERS employees also can retire at that age with as little as 10 years, but with a reduced annuity.) Those receiving an offer of early retirement can go out at any age with at least 25 years of service, or at 50 or older with 20.
Note: In RIF situations, “discontinued service” retirement may be available, on the same terms as early retirement offers. Special rules apply for those disabled, and mandatory retirement applies in some occupations, most numerously law enforcement.
Looking at those combinations, one would think that the large majority of federal employees—who still tend to have long careers with one employer (the federal government as a whole, not necessarily just one agency)—would retire voluntarily in their mid-50s, certainly at 60, and with a few outliers who joined relatively late in their careers gone at 62.
But in fact, the average age for voluntary retirement—excluding early retirement offers and the other variants—is now 63.
Of non-seasonal, full-time permanent employees—the heart of the federal workforce—89.5 percent of those under CSRS are already retirement-eligible but are continuing to work. For FERS, it’s 12 percent, for a total government-wide of 14.9 percent. Those numbers are as of 2016 and exclude the self-funding U.S. Postal Service as well as intelligence agencies whose employment totals are classified information.
According to the only study that OPM has published on retirement patterns, only 15 percent of employees retire within the first year of hitting their earliest eligibility combination. By the fifth anniversary of their eligibility, slightly more than half are still on the job. By their tenth anniversary of that date, about a quarter are still working.
Further, starting at seven years out from eligibility, the percentage of those remaining who retire declines, indicating that most of those still around will stay in it for the long haul.
What about retiring early? There are several slightly different datasets, but they all tell basically the same story: the vast majority of retirements are under standard rules, not early-out rules. One OPM report, through 2016, shows that of the 63,817 retirements in that year—also excluding the Postal Service and intelligence agencies—91.6 percent were regular voluntary retirements and only 946, 1.5 percent, were early-outs. Disability and mandatory retirements made up the rest.
That was on the low end of the 3-4 percent average going back to 2009, with fiscal 2012 an exception at 5.9 percent as more offers were made due to “sequestration” budget cuts that year.
Ah, you say, but what about that surge of early retirement offers under the current administration to downsize the federal workforce?
While that may yet happen, it hasn’t so far. OPM figures for fiscal 2017, which ended last September, show only 771 early retirements in that year out of 62,237. That’s 1.2 percent.
Looked at another way, the chances are far higher that you’ll continue working at least a year beyond your first standard retirement eligibility combination than that you’ll retire at that point, and it’s 50-50 that you’ll work at least four years beyond it. Meanwhile, there’s only a small chance that you’ll retire at any point earlier.
These are only averages of course, but this is important to know if you’ve been building retirement plans around a particular date. If the chance to go earlier arises, have you prepared yourself to be in a position to take it, not just financially but in all the other ways?
And if—as is much more likely—you stay longer, you could well enter retirement in better financial shape. But what will that do to your post-retirement life plans? To travel, to start a business, to build your dream house, or whatever—all at a more advanced age.
Those are much harder, but more important, questions to answer than what is your first retirement eligibility date.