Basics: Understanding Alternate Types of Retirement

As a Federal Employee, you have several options of retirement. Understand which type of retirement will apply to you and your circumstances. Too often, people do not understand these rules and end up leaving money on the table that will permanently lower their pension or eliminate other benefits they did not intend.

The following will help outline the basic rules that apply to most federal employees and does not contemplate the specifics that affect those of you retiring under Special Provisions (ie. Law Enforcement, Fire Fighter, Air Traffic Control, etc.)

Under the Federal Employees Retirement System (FERS), the distinction between voluntary, deferred, and postponed retirement comes down to your age, your years of service when you leave the government, and your eligibility for health benefits. 

1. Voluntary Retirement (Regular / Immediate)
   The Rule: You separate from federal service and are eligible to receive your pension (annuity) starting the very next month.
   Eligibility Guidelines:
   Age 62 with at least 5 years of service.
   Age 60 with at least 20 years of service.
   Minimum Retirement Age (MRA) with at least 30 years of service. (Note: MRA is between age 55 and 57 depending on your birth year.)
   Key Characteristic: Your pension is unreduced (full), and you are eligible to carry your Federal Employees Health Benefits (FEHB) and Federal Employees’ Group Life Insurance (FEGLI) into retirement (provided you met the “5-year continuous enrollment” rule before separating). 
2. Postponed Retirement 
   The Rule: You have reached your Minimum Retirement Age (MRA) and have at least 10 years of service (but fewer than 30 years), making you eligible for an immediate “MRA+10” retirement. However, taking an immediate pension at this stage triggers a steep penalty: a permanent reduction of 5% per year for every year you are under age 62. To avoid this penalty, you separate from service but postpone taking your pension until a later date.
   The “IF/THEN” Scenario:
   IF you take the pension immediately at MRA with 10 years of service, THEN your pension is permanently reduced.
   IF you leave your job at MRA but wait to claim the pension until age 60 (with 20 years of service) or age 62 (with 5 years of service), THEN you eliminate the age reduction penalty.
   The “BIG” Difference (Health Benefits): Because you were technically eligible for an immediate retirement when you separated, you are allowed to re-enroll in FEHB and FEGLI when your postponed pension finally begins. 
3. Deferred Retirement
   The Rule: You separate from federal service before you are eligible for any kind of immediate annuity (meaning you haven’t reached your MRA yet, or you haven’t hit the required years of service). You leave your retirement contributions in the system and apply to receive your pension down the road when you reach the qualifying age.
   Eligibility Guidelines:
   You must have at least 5 years of creditable civilian service.
   You can claim the pension at age 62 (with 5+ years of service) or at age 60 (with 20+ years of service).
   The Major Caveat: Unlike postponed retirement, with a deferred retirement you permanently lose the ability to carry FEHB and FEGLI into retirement. You will not be able to re-enroll in federal health or life insurance when your pension checks start. 

Summary Checklist Framework
To appeal to the “checkbox” mentality of organized planners:

1. Voluntary: Age & service requirements met 
   1.1.  Immediate pension 
   1.2.  Keep FEHB.
2. Postponed: Met MRA with 10+ years 
   1.1.  Delayed pension to avoid age penalties 
   1.2.  Resume FEHB later.
3. Deferred: Left early with 5+ years
   1.1. Claim pension at age 62
   1.2. No FEHB permitted. 

Get Personalized help over Zoom

FERS workshops are specialized training sessions for federal employees to understand retirement benefits, including pensions, Thrift Savings Plan (TSP), FEGLI, FEHB, and the FERS Special Supplement. These workshops, offered by providers like FedImpact, GPIS4U, and Ann Fagelson, help employees calculate annuities and make informed decisions, often required for those within five years of retirement