Last week I started this series on the most common questions regarding retirement by going over the rules governing when CSRS employees can retire and the basics of the annuity calculation. This time I’ll do the same for FERS employees. And I’ll start off by posing this question: What are the age and service requirements for a FERS employee to retire?
While the answer for CSRS employees was simple, things are a little different for most FERS employees. If you are a FERS employee, you can retire when you have one of the following combinations for age and service:
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. For example, if you were born before 1948, your MRA is 55. After that your MRA increases by 2 months per year until it reaches 55 and 10 months in 1952. It remains at 56 in 1953 through 1964, and then once again increases by 2 months per year until it reaches 57 in 1970 and thereafter.
Just as is true for CSRS employees, the age and service rules are changed if your agency is undergoing such things as a reduction-in-force or a reorganization and you have received a formal notice that your job may be affected by that action. If that’s the case, you can retire early with the following combination of age and service:
Age 50 with 20 years of service or at any age with 25 years of service.
Regardless of the way in which you meet the eligibility criteria for retirement, your annuity will be computed using a formula that includes the average of your highest three consecutive years of pay (your high-3) and your years of creditable service:
1 percent X your high-3 X all years of service
However, if you retire at age 62 or later with at least 20 years of service, the multiplier will be increased from 1 percent to 1.1 percent.
Unlike CSRS retirees, you won’t be entitled to an annual cost-of-living adjustment (COLA) until you reach age 62. And even then a reduction may apply—if the inflation measure is 2 percent or less, the FERS COLA is the indicated figure; if between 2 and 3 percent, the payout is 2 percent; if above 3 percent, it’s the indicated figure minus 1 percentage point.