When Should I Retire? The Federal Employee’s Guide to Timing Your FERS Retirement for Maximum Income

Look, I get it. Retirement planning sounds about as exciting as watching paint dry, right? But here’s the thing – if you’re a federal employee, your retirement situation is actually pretty unique (and honestly, pretty awesome if you play your cards right).

Unlike your friends working in the private sector who are basically gambling with their 401(k)s and hoping for the best, you’ve got this whole structured system working for you. But – and this is a big but – the timing of when you actually pull that retirement trigger can literally make or break your financial future. We’re talking about potentially hundreds of thousands of dollars over your lifetime. Yeah, you read that right.

So here’s what we’re dealing with: the Federal Employees Retirement System (FERS) has three main parts that work together – your pension (the Basic Benefit Plan), your Thrift Savings Plan (TSP), and good old Social Security. Think of them as a three-legged stool. Remove one leg, and things get wobbly real quick.

My goal here? I’m gonna break down all those confusing age milestones and show you where the money actually is. No boring government-speak, I promise. Just straight talk about when retiring makes the most financial sense for you.

Getting Clear on What You’re Actually Getting: Your Core Retirement Benefits

The FERS Pension – Let’s Do Some Math (Don’t Worry, It’s Easy!)

Okay, first things first. Your FERS pension is based on something called your “High-3” average salary. Basically, it’s the average of your highest-earning three consecutive years. For most folks, that’s gonna be your last three years before you retire, since you’re (hopefully!) making more money as you gain experience.

Here’s the catch though – we’re talking about your actual base salary here. Overtime? Nope. Bonuses? Nada. Just your regular paycheck amount.

Now, the formula itself is super straightforward:

Annual Pension = High-3 Average Salary × 1.0% × Years of Service

So if your High-3 is $100,000 and you’ve worked for 30 years, that’s $100,000 × 1% × 30 = $30,000 per year for the rest of your life. Not too shabby!

When Can You Actually Retire? The Age Game

This is where things get interesting. You can’t just wake up one Tuesday and decide you’re done. You need to hit certain age and service combinations to qualify for immediate retirement benefits.

First up is your Minimum Retirement Age, or MRA. Depending on when you were born, this ranges from 55 to 57. If you were born in 1970 or later, your MRA is 57. (Getting older every year, aren’t we?)

To retire with full, unreduced benefits right away, you need to meet one of these combos:

1. Hit your MRA with 30 years of service (we call this MRA+30 – it’s kind of a big deal)
2. Turn 60 with at least 20 years under your belt
3. Make it to 62 with just 5 years of service

Each of these opens different doors, and honestly, choosing between them is where most people get confused.

The Early Bird Option: MRA+30 and Why Everyone Calls It the “Golden Ticket”

Retiring at MRA+30: Getting Out Early with Full Benefits

So here’s why federal employees get all excited about MRA+30 – it’s literally the earliest you can retire with immediate, full, unreduced benefits. If you started working for the government in your mid-20s, you could potentially be out the door in your mid-to-late 50s with a full pension. Your friends in the private sector? Still grinding away.

But wait, there’s more! (Sorry, I’ve been watching too many infomercials.)

The FERS Supplement: Your Secret Weapon Until Age 62

If you retire under MRA+30 (or at age 60 with 20 years), you get this amazing thing called the FERS annuity supplement. It’s basically a bridge payment that estimates what you would’ve gotten from Social Security if you could collect at 62, and it pays you from retirement until you actually turn 62.

The calculation looks something like this:

(Years of Federal Service / 40) × Your Estimated Social Security Benefit at Age 62

So if you worked 30 years for the feds and your Social Security estimate is $20,000, you’d get about $15,000 per year as a supplement. That’s an extra $1,250 a month! Not bad for a “supplement,” right?

But Hold Up – The Supplement Has a Catch

Here’s where you need to pay attention, especially if you’re one of those energetic types planning a second career. The FERS supplement follows the Social Security earnings test rules. Translation? If you’re earning income from work after retiring (wages or self-employment), and it goes over the annual limit – which was $23,400 in 2025 – they start taking your supplement away. For every $2 you earn over that limit, they reduce your supplement by $1.

So if you’re planning to retire at 57 and then immediately start a consulting gig making $60,000 a year… yeah, you’re probably gonna lose most or all of that supplement. Something to think about!

Legislative Drama: The Supplement Might Not Be Around Forever

Okay, this is important and honestly kind of scary. Congress has been kicking around proposals to eliminate the FERS supplement for most people who retire before 62. Right now, the proposed effective date is January 1, 2028. If you’re in law enforcement, firefighting, or another position with mandatory early retirement, you’d likely be protected. But for everyone else? This could be a game-changer.

If you’re close to retirement and counting on that supplement, you might want to keep a close eye on this legislation. Using a federal retirement calculator now to see how losing the supplement would affect your plans is probably a smart move.

The Sweet Spot: Age 62 and the Magic 10% Pension Boost

Why Age 62 Might Be Your Real Golden Ticket

Alright, here’s where things get really interesting from a dollars-and-cents perspective. If you wait until you’re 62 to retire AND you have at least 20 years of service, that pension multiplier we talked about earlier jumps from 1.0% to 1.1%.

“Wait,” you’re thinking, “that’s only 0.1%. Big deal.”

Oh, but it IS a big deal! That tiny-looking increase actually boosts your entire pension by 10%. And remember, this is money you get every single month for the rest of your life.

Let’s run the numbers: Say you’ve got that same $100,000 High-3 with 20 years of service. Retiring before 62? You’re getting $20,000 per year. Retiring at 62 or later? You’re getting $22,000 per year. That’s an extra $2,000 every single year. Plus, when cost-of-living adjustments (COLAs) kick in, they’re being calculated on that higher base amount, so the difference compounds over time.

Over a 30-year retirement, we’re talking about tens of thousands of extra dollars. Maybe even over $100,000 when you factor in those COLAs. Suddenly that 0.1% doesn’t seem so small anymore, does it?

Other Good Stuff That Happens at 62

Age 62 is kind of like unlocking a new level in a video game. Suddenly, a bunch of things become available:

Social Security kicks in: You can start drawing Social Security benefits at 62, though they’ll be reduced compared to waiting until your full retirement age (usually 67 these days). Whether you should actually take it at 62 is a whole other conversation involving actuarial tables and life expectancy predictions. Fun times!

TSP flexibility: If you separate from federal service in the year you turn 55 or later, you can generally pull money from your TSP without that annoying 10% early withdrawal penalty. This gives you a lot more flexibility in managing your retirement income.

The trade-off: Here’s the kicker though – you can’t have your cake and eat it too. You can either get the FERS supplement (MRA+30, ends at 62) or the 1.1% multiplier boost (age 62+), but not both. They’re mutually exclusive, like choosing between two paths in those old Choose Your Own Adventure books.

A Helpful Way to Think About It

I like to think of the federal retirement system like a multi-stage rocket (bear with me here).

Stage 1 (MRA+30) gets you off the ground quickly. You’re out the door earlier with immediate, unreduced benefits, plus that nice FERS supplement booster rocket helping you along until 62. Great if you’re ready to be done working or have other plans for your time.

Stage 2 (Age 62+20) is more like upgrading your engine permanently. You’re not leaving as early, but once you do, you’ve got maximum thrust for the rest of your journey. That 1.1% multiplier is a structural upgrade that pays dividends for your entire retirement.

Which stage is right for you? That depends on your health, your financial needs, how much you hate (or actually like) your job, and what you want to do with your life. Using a federal retirement calculator can help you model both scenarios with your actual numbers.

The Not-So-Great Options: Early Retirement Trade-offs

The MRA+10 Penalty: Ouch

Look, life happens. Maybe you’ve got 15 years in and you just can’t do it anymore. There is an option to retire at your MRA with only 10-29 years of service. It’s called MRA+10.

But here’s the brutal truth: this option comes with a permanent 5% reduction for every year you are under age 62. Did I mention permanent? Because it’s permanent.

Let’s say you retire at MRA (age 57) with 15 years of service. You’re five years short of 62, so that’s a 25% permanent cut to your annuity. For the rest of your life. If your pension would’ve been $15,000 per year, you’re now looking at $11,250. Every. Single. Year.

Honestly? Unless you’re in dire health or have a compelling reason, this option is usually pretty painful financially.

Deferred and Postponed Retirement: The Waiting Game

Sometimes you leave federal service before you’re eligible to collect benefits. Maybe you got a job offer you couldn’t refuse, or life circumstances changed. You’ve still got options, just with some waiting involved.

Deferred retirement means you leave before meeting the age and service requirements, but you can still collect later. For example, if you leave at 55 with 8 years of service, you can start collecting a pension at 62 (since you’ll have at least 5 years).

Postponed retirement is when you’re eligible for reduced benefits (like MRA+10) but you choose to wait to apply. Each year you wait reduces or eliminates that age penalty. Smart play if you’ve got 10+ years but aren’t quite at 30 yet.

Special Circumstances: Involuntary Separations and Disability

Sometimes the decision to leave isn’t really yours. If there are layoffs or the government offers Voluntary Early Retirement Authority (VERA), you might qualify for early retirement benefits at age 50 with 20 years or any age with 25 years. These are actually pretty decent deals if you’re affected.

Disability retirement is available if you become unable to perform your job, but it comes with its own set of rules and, unfortunately, you typically won’t get the FERS supplement.

Don’t Forget the Other Stuff: Health Care, Insurance, and Administrative Details

The FEHB 5-Year Rule: Don’t Mess This Up

Here’s something that can really bite you if you’re not careful. To keep your Federal Employee Health Benefits (FEHB) coverage into retirement – and trust me, you want this – you must have been enrolled for the five years immediately before retirement.

If you switched to your spouse’s insurance three years ago to save money? Congrats, you just disqualified yourself from federal health benefits in retirement. Oops.

Also, heads up: in retirement, you’re paying FEHB premiums with after-tax dollars, which means they’ll feel more expensive than when the government was chipping in and taking it from your pre-tax paycheck.

At 65, you’ll need to enroll in Medicare (Part A is usually free for federal retirees). Understanding how Medicare coordinates with your FEHB plan is important, but that’s honestly complicated enough for its own blog post.

FEGLI: To Keep or Not to Keep?

Federal Employee Group Life Insurance (FEGLI) is great while you’re working, but those premiums can absolutely skyrocket around age 55. I’m talking “did they add an extra zero by mistake?” levels of expensive.

You’ll need to decide whether to continue coverage, reduce it, or drop it entirely and maybe find a more affordable private option. This is definitely one of those areas where talking to a financial advisor who specializes in federal benefits can save you serious money.

Strategic Leave Management

Sick leave: This is actually really valuable! Any unused sick leave hours get converted into creditable service time that counts toward your pension. If you’re sitting at 19 years and 8 months of service with a bunch of sick leave banked, that could push you over the 20-year threshold needed for the 1.1% multiplier at age 62.

Annual leave: Gets paid out as a lump sum when you retire. Nice little retirement bonus, though it’s all taxable in that year.

Military buyback: If you served in the military before your federal civilian career, you can “buy back” that time by making a deposit. This adds those years to your creditable service, pumping up your pension. Often a very good deal if you’ve got military time.

The OPM Processing Reality Check

When you finally submit your retirement application to the Office of Personnel Management (OPM), don’t expect immediate gratification. As of September 2025, the average processing time from receipt to final adjudication was about 76 days. That’s two and a half months!

Make sure your finances can handle that gap, because you’ll be in what they call “interim pay” until OPM finishes processing everything. It’s usually less than your final annuity will be, so budget accordingly.

Bringing It All Together: Your Personal Retirement Roadmap

Look, I’ve thrown a lot of information at you, and your eyes might be glazing over at this point. But here’s the bottom line: there’s no magic age that works for everyone. Your best retirement age depends on your personal situation – your financial needs, your health, whether you love or hate your job, what you want to do in retirement, and dozens of other factors.

That said, from a pure financial optimization standpoint, the two big sweet spots in the federal retirement system are:

MRA+30: Get out the earliest with full benefits plus the FERS supplement bridge payment (at least until Congress potentially eliminates it).

Age 62+20: Lock in that permanent 10% pension boost from the 1.1% multiplier that lasts your entire retirement.

Everything else is basically a trade-off between these positions.

Your Action Plan: What to Do Right Now

Alright, enough theory. Let’s talk about what you should actually DO with all this information:

1. Crunch the numbers: Find a good federal retirement calculator and plug in your actual information. Model different scenarios – retiring at MRA+30 versus waiting until 62. See the real dollar differences with YOUR numbers, not the examples I’ve been using. The results might surprise you.

2. Check your insurance situation: Right now, today, verify you meet that FEHB 5-year enrollment rule. If you don’t, fix it immediately. Future you will thank present you.

3. Maximize your High-3: If you’re within a few years of retirement, think strategically about how to maximize your salary in those final three years. Promotions, step increases, and locality adjustments all matter because they directly affect your pension calculation.

4. Get professional help: This is complicated stuff, and one mistake can cost you tens of thousands of dollars. Consider hiring a financial advisor who specializes in federal benefits – look for someone with a ChFEBC (Chartered Federal Employee Benefits Consultant) or CFP (Certified Financial Planner) designation who works with federal employees regularly. They can help you coordinate your pension, TSP, Social Security, and health benefits into an actual plan rather than just hoping it all works out.

5. Stay informed: Keep an eye on that legislation about eliminating the FERS supplement. If you’re counting on it and it goes away, that could change your entire retirement timeline.

The Bottom Line

Federal retirement is genuinely one of the better retirement systems out there, but it’s also complex enough that you can make expensive mistakes if you don’t understand how the pieces fit together. The difference between retiring at the right time versus the wrong time can literally be worth six figures over your lifetime.

So take the time to understand your options. Use that federal retirement calculator to model different scenarios. Talk to people who’ve already retired. And seriously consider getting professional advice – it’s one of those situations where spending a little money now can save you a lot of money later.

Your future retired self is counting on present-day you to make smart decisions. Don’t let them down!

And hey, if all this seems overwhelming, just remember: millions of federal employees have figured this out before you, and millions more will after you. You’ve got this. Just take it one step at a time, use the resources available to you, and make the choice that’s right for YOUR life, not what worked for someone else.

Now go use that federal retirement calculator and start actually planning instead of just worrying. You’ll feel better once you have real numbers to work with!