If you don’t meet the requirements to retire on an immediate annuity, you may apply for a deferred annuity when you become old enough to meet one of those combinations, given your years of service. You need to have at least 5 years of service, not ask for a refund of your retirement contributions, and meet one of the following age and service combinations:
• 62 with 5
• 62 with 5
• 60 with 20
• your minimum retirement age (55-57, depending on your year of birth) with 30
• your MRA with 10, but your annuity will be reduced by 5 percent for every year (5/12 of 1 percent per month) you are under age 62 (60, if you have 20 years of service)
Note: This is not a common consideration for those working under CSRS at this point, since that system applies only to those first hired before 1984; more than nine-tenths of current CSRS employees already are eligible to retire.
Deferred annuities are calculated using the same formula that is used for an employee. Note that the “high-3” figure used will be the one in effect at the time you left the service. It will not be increased by any intervening cost-of-living-adjustments or by the increases in salary for the grade and step of the position you held before leaving. However, COLAs will be paid on any annuity you receive.
What if you don’t apply for a deferred annuity at the pertinent age for your retirement system and years of service? This could happen for example to those who thought they had lost eligibility by withdrawing their retirement contributions on separation, and never returned to government to repay them and recapture that service time. But later on they find themselves not so sure they did withdraw their contributions—maybe that money they received on separation was for unused annual leave?—and think they may be eligible after all.
Or, someone could have left, maybe many years ago, and didn’t withdraw the money but they may never have known—or knew at one time but forgot—about the concept of a deferred benefit, and it was brought to their attention only later.
If you don’t apply for a deferred annuity as soon as you are eligible you can later apply for one and you’ll be entitled to 1) all the money you would have received if you’d applied for it when you first became eligible and 2) monthly payments from that point forward until you die. And while the benefit still will be calculated on the high-3 salary (and years of service) at the time of separation, it would be increased by COLAs paid on annuities in that system in the meantime.
Thus, it can be too early to apply for deferred retirement, but it’s never too late.
ask.FEDweek.com: Calculating a Deferred Annuity