When Can I Retire From the Federal Government?

Retiring from federal service involves understanding eligibility requirements and financial implications. Federal employees must grasp the specific rules governing their retirement system, as these dictate both the timing and amount of benefits received.

Understanding Federal Retirement Systems

Federal employees are covered by one of two primary retirement systems: the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). FERS covers most employees hired after December 31, 1983, or those who opted to switch from CSRS. CSRS primarily covers employees hired before January 1, 1984, who remained under that system.

FERS is a three-tiered retirement plan combining a basic benefit annuity, Social Security, and the Thrift Savings Plan (TSP), a defined contribution plan. CSRS is a defined benefit plan that does not include Social Security for federal service. Employees under CSRS Offset contribute to both CSRS and Social Security, with their CSRS annuity later reduced by the Social Security benefit earned during their offset service.

General Requirements for Voluntary Retirement

For a standard voluntary, unreduced retirement, both FERS and CSRS have specific age and service requirements. Under FERS, an employee can retire with an immediate, unreduced annuity by meeting one of three combinations: reaching their Minimum Retirement Age (MRA) with 30 years of creditable service, attaining age 60 with 20 years of service, or reaching age 62 with 5 years of service. The MRA varies by birth year.

For employees under CSRS, requirements for an immediate, unreduced annuity are age 55 with 30 years of service, age 60 with 20 years of service, or age 62 with 5 years of service.

Other Pathways to Federal Retirement

Beyond standard voluntary retirement, several other pathways exist for federal employees, each with distinct eligibility criteria and potential annuity implications.

One option under FERS is the MRA + 10 retirement, allowing an employee to retire at their MRA with at least 10 but fewer than 30 years of service. This option results in a permanent 5% reduction for each year the employee is under age 62, which can be avoided or lessened by postponing the annuity start.

Early voluntary retirement may be available during agency downsizing or reorganization. For both FERS and CSRS, eligibility for early retirement requires being at least age 50 with 20 years of service, or any age with 25 years of service. These offers target specific organizational units or job series.

Deferred retirement is an option for employees who leave federal service before meeting immediate annuity requirements but have completed at least five years of creditable civilian service. The annuity begins at a later age, typically age 62 for both FERS and CSRS, or at their MRA if they have at least 10 years of FERS service. For FERS deferred annuities, a 5% reduction per year under age 62 may still apply unless specific conditions are met.

Disability retirement is available if a federal employee becomes unable to perform their job due to a medical condition. For FERS, this requires at least 18 months of creditable civilian service, while CSRS requires 5 years. The disability must be expected to last at least one year and render the employee unable to perform their position.

Discontinued service retirement (DSR) provides an immediate annuity for employees involuntarily separated from service, not due to misconduct or delinquency. Eligibility requires being at least age 50 with 20 years of service, or any age with 25 years of service.

Financial Considerations for Retirement

Both FERS and CSRS annuities are based on an employee’s “high-3” average salary and years of creditable service. The “high-3” is the highest average basic pay earned during any three consecutive years of service.

For FERS, the basic annuity is calculated as 1% of the high-3 average salary multiplied by the years of creditable service. If an employee retires at age 62 or later with at least 20 years of service, the multiplier increases to 1.1%. Unused sick leave can also be credited to increase the length of service for annuity computation, though it does not count towards retirement eligibility.

CSRS annuity calculations use a tiered percentage system. For the first 5 years of service, the multiplier is 1.5% of the high-3; for service between 5 and 10 years, it’s 1.75%; and for service over 10 years, it’s 2%. The maximum CSRS benefit is 80% of the high-3 average salary, plus credit for unused sick leave.

The FERS Special Retirement Supplement (SRS) is an additional payment for eligible FERS retirees who retire before age 62 and are not yet eligible for Social Security. This supplement approximates the Social Security benefit earned from federal service and helps bridge the income gap until age 62. The SRS is subject to an earnings test.

The Thrift Savings Plan (TSP) plays a significant role in FERS retirement income. Employees contribute to their TSP accounts, and agencies also make contributions, including an automatic 1% of basic pay. TSP offers various withdrawal options in retirement, such as single payments, a series of payments, or the purchase of an annuity. Contributions can be traditional (pre-tax) or Roth (after-tax), affecting the tax implications of withdrawals.

Social Security benefits integrate with FERS retirement. For CSRS retirees who also have Social Security benefits from other employment, the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) may apply. WEP can reduce a Social Security benefit if the retiree also receives a pension from non-Social Security-covered employment, while GPO can reduce a Social Security spousal or survivor benefit if the individual also receives a government pension based on their own non-Social Security-covered work.

Maintaining Benefits in Retirement

The Federal Employees Health Benefits (FEHB) program allows retirees to maintain their health insurance. To be eligible, an employee must retire on an immediate annuity and have been continuously enrolled in any FEHB plan for the 5 years of service immediately preceding their retirement date.

The Federal Employees’ Group Life Insurance (FEGLI) program offers options for continued coverage into retirement. Retirees need to have been enrolled in FEGLI for the 5 years of service immediately preceding retirement. While coverage can continue, the amount of life insurance often decreases gradually after retirement, depending on the options elected.

The Federal Employees Dental and Vision Insurance Program (FEDVIP) allows eligible annuitants to continue dental and vision coverage into retirement. There is no 5-year enrollment requirement to continue FEDVIP coverage in retirement, provided the employee retires on an immediate annuity. Retirees can even enroll in FEDVIP for the first time upon retirement if they receive an immediate annuity.