FERS Early Retirement: MRA+10

There are two main types of FERS Early Retirement. One is MRA+10 Retirement - which we'll be discussing here. Another type of Early FERS Retirement is when your agency is going through a RIF - and they offer employees a chance to take an Early Out.

New Webinar:

"Fundamentals of
Phased Retirement"

New Webinar Series with Tammy Flanagan and Micah Shilanski, CFP®

FERS Webinar

Find Out More...

On this page, we'll be talking about MRA+10 Retirement. But click here if you want to learn more about Early Outs. 

Special Option for FERS Retirement

FERS have a special option to retire before you meet the regular immediate FERS retirement rules.

To qualify for FERS Early Retirement (MRA+10) you must...

This is a great option to have - but it comes with some serious drawbacks.


What If I Have 30+ Years in Service?

If you have reached your MRA, and have more than 30 years of creditable service, you may be eligible for regular Immediate Retirement. Under regular Immediate FERS Retirement, you will receive 100% of your pension. Click here to learn more about regular immediate FERS Retirement. 


MRA+10 FERS Early Retirement = Reduced Pension

FERS Early Retirement is a nice option to have - but it comes with some important drawbacks you should know about:

  1. When you retire under MRA+10 rules, your FERS pension will bePERMANENTLY reduced by 5% for every year you are under age 62.
  2. You should also know that your pension will not get Cost of Living Adjustments UNTIL you reach age 62. And when you do qualify to have your pension increased by COLA – you will not get any retroactive increases, it simply increases by whatever amount is set for that year.


Example of Pension Reduction for Early FERS Retirement

Let's say your MRA is 56 years old, and you retire at 56 years old with 10 years of creditable service. And let's say you had a High-3 of $55,000.

Under the regular FERS pension formula - your pension would be calculated as...

$55,000 x 10 Years x 1% = $5,500/year
...................................................or $458/month

But - if you're taking an Early FERS Retirement under MRA+10 Rules, your pension will be reduced.

The reduction is 5% for each year you are under age 62 when you start your pension. Technically the reduction is calculated by months - it's 5/12ths of 1% for each month (which still works out to 5% a year). We're sticking to whole years to make this example easier to understand.

In our example, you're 56, which is (62-56) 6 years before you will be 62.

6 years x 5% = 30% reduction

So your full pension, before the reduction, was $458/month. 30% of $458 is $137. $458 - $137 = $321/month.

Your Pension After 30% Reduction: $321/month

And remember that reduction is *PERMANENT*. You will continue to get $321 a month until you reach age 62, at which point you will qualify for the Cost of Living Adjustment (let’s say the retirement COLA is 2% that year). At age 62, you will now receive $327 a month. 


Want To Avoid the Reduction?

Let’s say you want to do an MRA+10 Early FERS Retirement, but you don’t want to take the permanent reduction to your pension.

You have a couple of options...

#1) Forgive me for being obvious here, you could keep working until you are eligible for regular immediate FERS retirement. For most people in this situation, that would probably be age 62. By age 62 you would likely qualify under regular FERS retirement rules of Age 62 with 5 or more years of service.

But if that's not an option...

#2) You can separate from service and leave your FERS contributions in the system. Later, you draw your pension when you have reached the age when you can begin receiving your unreduced pension (which for most people in this situation would probably be age 62).

If you separate from service but delay starting your pension - this is called either a Deferred or Postponed Retirement.

There is a *BIG* difference between a Deferred FERS Retirement and a Postponed FERS Retirement. Make sure you understand the difference between a Postponed and Deferred Retirement *before* you separate from service. 


“Are you getting the most out of your benefits?”

Take a FERS Pre-Retirement Course – Online

 ✔ How to Maximize Your FERS Benefits

 ✔ Understand Your Retirement Income

 ✔ Custom FERS Retirement Calculators

 ✔ Learn One Step at a Time

 ✔ Instant Access – Available 24/7



FERS-Route-to-Retirement is the
most comprehensive Pre-Retirement
& Financial Planning class for Federal
Employees available online 

  - or your money back


Are you ready to start
planning your FERS Retirement?


>>>Get Started with FERS Route to Retirement<<<




Sign up for our Monthly Newsletter:

Federal Retirement Planning

federal retirement, federal retirement planning

Enter your E-Mail Address



Enter your First Name (optional)


Then

Don't worry -- your e-mail address is totally secure.
I promise to use it only to send you Federal Retirement Planning.






Who is Micah?

Micah Shilanski is a CERTIFIED FINANCIAL PLANNER™ professional who specializes in helping federal employees get the most out of their federal retirement benefits.  

Micah’s experience as financial planner for federal employees provide him with valuable insight into the unique planning needs of federal employees.

Micah helps his clients with tax planning, retirement planning, federal retirement planning, estate planning, and investment advice. Click here to learn more about how Micah helps his clients.






Micah Shilanski is a CERTIFIED FINANCIAL PLANNER™ professional who specializes in helping federal employees get the most out of their retirement benefits. Micah is a fee-based financial planner and works with a select group of clients. Micah works with each client to tailor a plan that is customized to their dreams, goals, and financial situation. Each client is unique, and so is their plan.

Plan Your Federal Retirement is not employed by the federal government and does not represent the federal government.

Plan Your Federal Retirement is a dba of Shilanski & Associates, Inc. Shilanski & Associates, Inc. is an independent financial planning firm headquartered in Anchorage, Alaska, that has been in business for nearly 30 years.

Shilanski & Associates, Inc., is an Alaska Registered Investment Advisor, with securities offered through Summit Brokerage Services, Inc., Member FINRA/SIPC. Shilanski & Associates, Inc. is not affiliated with Summit Brokerage Services, Inc.

All information herein is solely for informational purposes. This is not an offer to buy or sell securities. The presence of this web site on the Internet shall in no direct or indirect fashion raise any inference or implication that Shilanski and Associates, Inc., an Alaska Registered Investment Adviser, is selling, offering to sell or soliciting to provide investment advisory services to residents of any state other than the state of Alaska.


Copyright 2009-2014 Plan-Your-Federal-Retirement.com All Rights Reserved.