Reg Jones Expert's View

Last week we looked at the things you need to consider before you decide to retire. Now let’s turn to picking a date to do it.

To help you down that path, I want to point out that you can retire on any day of the week you want to, even on a holiday. And you can even do that at any time during a pay period. However, there are rules that govern when you are eligible to retire. And they are different for CSRS and FERS.

FERS Rules
If you are a FERS employee, you can retire at age 62 with 5 years of service, 60 with 20, or at your minimum retirement age (MRA) with 30. (MRAs range between 55 and 57, depending on your year of birth.) FERS employees can also retire under the MRA+10 provision, but with a 5 percent per year reduction for every year (5/12ths of 1 percent per month) they are under age 60.

If you want to be on the annuity roll in the following month, you have to retire no later than the last day of a month For example, you’d need to leave by October 31 if you wanted your annuity to begin in November. If you missed that end-of-month cutoff, your annuity wouldn’t start until December.

CSRS Rules
If you are a CSRS employee, you can retire at age 62 with 5 years of service, 60 with 20, or 55 with 30. You can retire up to the third day of the month and still be on the annuity roll in that month. Of course, each day you wait before retiring reduces the amount of your annuity by one day.

For example, if you leave on October 3, your October annuity would be based on 27 days. Twenty-seven days? Since October has 31 days, why not 28? The reason is simple. For annuity purposes, OPM divides the year into 12 30-day months. That way your monthly annuity payments will be the same. They don’t increase or decrease based on the actual length of a particular month.

Now you know the ground rules governing when you are eligible to retire and when your annuity begins. Next week I’ll talk about how to pick a departure date that maximizes the dollar value of your retirement.

Read more about retirement eligibility and MRA under FERS and CSRS at ask.FEDweek.com

See also, Holding Your Retirement Plans Close to the Vest