Retirement & Financial Planning Report

Whether you are a CSRS or FERS employee, the eligibility rules for voluntary early retirement authority, or VERA, are the same. Under a VERA, you can retire at age 50 with 20 years of service or at any age with 25. If you are a CSRS employee, your annuity will be reduced by 2 percent for every year (1/6 percent per month) that you are under age 55 when you retire (that applies to few CSRS workers now). If you are a FERS employee, the 5 percent per year (5/12 percent per month) age penalty is waived when you retire.

In either case, your annuities will be computed using the standard formulas for each retirement system. For FERS, that’s .01 x your high-3 x your years and full months of service.

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For CSRS, it’s more complicated:
.015 x your high-3 x 5 years of service, plus
.0175 x your high 3 x 5 years of service, plus
.02 x your high-3 x all remaining years and full months of service

If you are a CSRS retiree, you’ll receive annual cost-of-living adjustments (COLAs), regardless of the age at which you retire. If you are a FERS retiree, you’ll have to wait until you are 62.

And here’s another difference between CSRS and FERS retirees. If you are a FERS retiree, you’ll be entitled to receive the special retirement supplement when you reach your minimum retirement age. (MRAs range between 55 and 57, depending on your year of birth.) The SRS approximates the Social Security benefit you earned while a FERS employee. It doesn’t include credit for any active duty service in the military for which you’d made a deposit.

Note: While the SRS helps to bridge the gap between when you retire and when you are first eligible for a Social Security benefit at age 62, it isn’t increased by COLAs.

Of course, your annuity isn’t everything. You’ll need to consider the effect your retirement will have on your ability to continue your health and life insurance coverage. 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, without a break, into retirement. The premiums will then be deducted from your annuity payments.

Read more about voluntary early retirement from a federal job at ask.FEDweek.com