Reg Jones Expert's View

Have you made up your mind that you want to retire soon—the end of the year is a very popular time—or are you at least thinking about it? First, you need to know if you have one of the needed combinations of age and service. Second, you need to know something about picking a date.

For CSRS, the eligibility rules are simple. You can retire on an immediate annuity at age 62 with at least 5 years of service, 60 with 20 years of service or age 55 with 30.

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The rules for FERS are more flexible. As a FERS employee you can also retire at age 62 with at least 5 years of service and age 60 with 20 years of service. However, unlike CSRS you can only retire with 30 years of service if you have reached your minimum retirement age. MRAs range from 55 to 57 depending on your year of birth.

You can also retire at your MRA with as few as 10 years of service; however, if you do that, your annuity will be reduced by 5 percent (5/12ths of 1 percent per month) that you are under age 62.

While you can retire on any day of the week you want to, even on a holiday, or at any point during a pay period, you need to keep two things in mind. First, if you retire at any time before the end of a pay period, you won’t get credit for any sick or annual leave you would have otherwise earned during those two weeks. Second the rules about when a retirement annuity starts are different for FERS and CSRS employees.

If you are covered by FERS, you have to retire no later than the last day of a month if you want your annuity to start in the following month. For example, you’d need to leave by November 30 to receive the annuity you earned in December on January 1. If you missed that last day of November cutoff, you wouldn’t receive your first month’s annuity until February 1.

The rules are different for CSRS: you can retire up to the third day of the month and still receive an annuity for that month; however, each day you wait before retiring reduces the amount of your annuity for that month by one day. For example, if you separated on December 3, the amount of annuity you earned in December would be based on 27 days.

FYI: For annuity purposes, OPM divides the year into 12 30-day months. That way your monthly annuity payments won’t rise and fall based on the length of a given month.

Next week I’ll suggest ways to pick a retirement date that maximizes the dollar value of your retirement.

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FERS Retirement Guide 2021