Retiring at Your MRA: Immediate, Postponed, or Deferred

"When can I retire?" is usually the first retirement question a federal employee asks. Under FERS, the honest answer is "it depends how", because the same age can lead to quite different outcomes depending on your years of service and the type of retirement you take.

First, your MRA

Your Minimum Retirement Age depends on the year you were born. It's 55 for the oldest FERS employees and rises gradually to 57 for anyone born in 1970 or later. Most people still working today have an MRA of 56 or 57. OPM publishes the full table.

Reaching your MRA doesn't by itself mean you can retire on a full pension. What it unlocks depends on how many years of service you have.

The unreduced paths

In outline, FERS offers an immediate, unreduced pension when you reach:

• your MRA with 30 years of service;
• age 60 with 20 years; or
• age 62 with 5 years.

If you meet one of these, the questions are mostly about timing and money rather than penalties. The rest of this article is about the more common situation: reaching your MRA with at least 10 years of service, but fewer than 30.

Path one: immediate retirement at MRA+10

With at least 10 years of service, you can retire at your MRA and start your pension straight away. The trade-off is a permanent reduction: 5% for each year you're under 62 when the pension begins. Retiring at 57 under this path means a pension reduced by 25%, for life.

Two more details shape the picture:

• No FERS supplement. The supplement that bridges some early retirees to Social Security isn't paid on an MRA+10 retirement.
• Health coverage can continue, provided you meet the FEHB five-year rule.

Path two: postponed retirement

You can separate at your MRA with at least 10 years of service and choose to start your pension later. Waiting reduces the penalty: start at 62 and there's no reduction at all, and with 20 or more years of service you can start at 60 without a reduction.

The important detail here is health coverage. With a postponed retirement, FEHB generally stops when you separate, and can be reinstated when your pension begins, as long as you met the five-year rule when you left. That leaves a gap between leaving and your pension starting where you'll need coverage from somewhere else, and it's a cost to plan for, not discover.

Path three: deferred retirement

If you leave federal service before your MRA, or before you meet the conditions above, you can usually still receive a pension later, based on the service you completed. This is a deferred retirement.

The cost is health coverage. With a deferred retirement you generally can't bring FEHB back when the pension starts. For many people that single fact outweighs everything else about the decision. If you're thinking about leaving early for another job, find out exactly where you stand on this before you resign.

How the TSP fits in

Whichever path you take, the years between leaving and your pension, the supplement or Social Security starting are often the years your TSP works hardest. If you postpone your pension to avoid the reduction, your TSP may be what you live on in the meantime. That's exactly the situation the gap exercise is designed for: do it once for the bridge years and once for after.

Where to go from here

OPM's retirement eligibility rules are the authority, and your agency's retirement counsellor can give you estimates for each path. Once you know which path you're on, read the five TSP options with your bridge years in mind, and use The TSP Secure Path to take the decisions in order.