A unique feature of the FERS retirement system is the MRA+10 provision. It allows employees to retire at their minimum retirement age with as few as 10 years of service.
In these times when many federal employees are thinking of retirement, it could present an unexpected opportunity.
You can find your MRA by checking the chart below:
If you were born before 1948, your MRA is 55
If you were born in 1948, it’s 55 and 2 months
1949, 55 and 4 months
1950, 55 and 6 months
1951, 55 and 8 months
1952, 55 and 10 months
In 1953 through 1964, your MRA is 56
1965, 56 and 2 months
1966, 56 and 4 months
1967, 56 and 6 months
1968, 56 and 8 months
1969, 56 and 10 months
And, in 1970 and later it’s 57
If you retire under the MRA+10 provision, your annuity will be calculated using the standard formula: 0.01 x your high-3 x your years and full months of service. However, there is a price to be paid for retiring early. Your annuity will be reduced by 5/12 of 1 percent for every month you are under age 62. That’s a whopping 5 percent per year.
You can reduce or eliminate that penalty by retiring and postponing the receipt of your annuity to a later date. Whether that option makes sense depends both on your financial situation and how long it will be before you can receive an unreduced annuity. While you won’t be entitled to the special retirement supplement on retirement, at age 62 you will be entitled to any Social Security benefit you earned while covered by Social Security, whether under FERS or working on other jobs.
Note: If you have at least five years of consecutive coverage under the Federal Employees Health Benefits or Federal Employees’ Group Life Insurance programs on the day you retire, you’ll be able to carry that coverage into retirement, with the premiums being deducted from your annuity payments.
If you postpone the receipt of your annuity, you’ll receive a 31-day extension of coverage at no cost to you. Then, under the Temporary Continuation of Coverage provision, you’ll be able to keep your health benefits coverage by paying the full premiums, plus 2 percent, to your former agency. You’ll also have the option of converting to a private life insurance policy, for which you’d pay the premiums.
In closing, I want to repeat what I wrote at the end of my articles on CSRS and FERS employees. If you are already eligible to retire, please ask yourself a few questions. Am I emotionally ready to retire? Am I financially able to do that? Do I know what I’m going to do with my time after I leave? Those questions would have been easy to answer until COVID-19 hit. Now those answers might be different. A word to the wise: Think before you jump.
Next week, I’ll close this series by filling you in on the rules governing deferred retirement.