Retirement & Financial Planning Report

Normally, an employee is eligible to retire from federal service when the employee has at least 30 years of service and is at least age 55, has at least 20 years of service and is at least age 60, or has at least five years of service and is at least age 62.

However, the Office of Personnel Management may allow agencies to temporarily lower the age and service requirements in order to increase the number of employees who are eligible for retirement in a downsizing, thus encouraging more voluntary separations (the Defense Department has permanent authority to offer early retirements without first seeking OPM approval). There is also a standing authority for granting early outs for workforce restructuring.


Under an early retirement authority, the basic age and service requirements are reduced to 20 years of federal service at age 50 or 25 years of service, regardless of age. By offering these short term opportunities, employees can receive an immediate annuity years before they would otherwise be eligible. There is a 2 percent per year annuity reduction for taking an early retirement under CSRS before age 55, however.

The agency determines which components, occupations, grades, series or positions will be excluded from or included in early retirement offers. Broadly, an agency may use early retirements only to the extent necessary to achieve reductions in the workforce that result from factors such as lack of funds, shortage of work, reorganizations, skills imbalances, or closures and to minimize the number of employees reached for involuntary separation or demotion because of organizational changes such as reorganizations, budget reductions, reductions in force, and shifts in staffing needs.

Agencies may establish a specific window period or periods within the OPM approved authority period in which voluntary early retirements are available to employees without delegated authority from OPM. Window periods established by the agency may be applicable to the entire authority, or only to employees in specific organizational units, occupational series or levels, or geographic areas.

Some employees reject offers out of hand, usually because they haven’t reached a financial position from which they can stop working, even if they would be drawing an annuity. For some, it’s a lifestyle decision; they simply wish to continue working for a certain period, possibly in order to coordinate their retirement with that of a working spouse.

Similarly, some employees accept early retirement offers with little thought. They are eager to leave their federal government employment for a variety of reasons—an outside job opportunity, dissatisfaction with the way their program is being administered, even personality conflicts with co-workers or supervisors.

But before making a hasty decision in either direction, be sure to fully understand the consequences of taking early retirement. It might be a better deal than you expect and might open up opportunities for outside employment or retirement activities that you hadn’t anticipated. Or, it might be a worse deal than you expect, leaving you with a lifetime annuity smaller than you had been hoping for or even expecting.