The most common question we hear in seminars across the country is “what is the earliest I can retire!”. We want to cover the Early-Retirement options you have without there being an Early-out so everyone knows their options.
The first is a MRA+10 Early Retirement: This requires that you have at least 10 years of Civilian service (bought military time doesn’t count) and you have met your Minimum Retirement Age (MRA). If you have both requirements met you can retire but you will be subject to a penalty.
Let’s assume Joe has 12 years of service and is at age 56 (his MRA). He wants to retire and start his annuity immediately. Because Joe didn’t meet the full retirement guidelines he will see a 5% penalty for every year he is under age 62 (30%). If Joe’s pension was supposed to be $1,000 for his 12 years of service it will now be $700 after the penalty.
How can you avoid the penalty?
Joe can avoid the penalty by taking a Postponed Retirement. In a Postponed Retirement you do not draw your annuity immediately but postpone it until age 62. During the period between retirement and age 62 he will not have any federal benefits. However, when his annuity starts he will be able to enroll in FEHB and life insurance at that time.
Can I Retire Early if I am under my MRA?
The answer is yes, however it comes at a cost. This is called a Deferred Retirement. You can retire under your MRA as long as you have at least 5 years of creditable civilian service. For example if Joe is 53 and not at his MRA and has 8 years of service and wants to go to work somewhere else he can retire. His pension will be based on 8 years of service and there will be no penalty. He cannot draw his pension until age 62 and he WILL NOT BE ABLE TO CONTINUE FEDERAL HEALTH INSURANCE IN RETIREMENT.
Please understand your options before you decide to retire. You can request a free benefits review by visiting www.postalbenefitreview.com