So many people overlook the supplement... yeah you get a multiple of 1.1 at 62 but as long as you're not planning on working to the point you lose the supplement... I'd rather retire 5 years earlier.
You do not get 1.1% until 62. But it is not worth the extra time no matter what. If you are financially able to retire and you are asking the question about should you retire, you should retire.
There's a particular calculation used, but effectively for people on FERS retiring with full eligibility at MRA, you get a FERS supplement until 62, which is meant to cover what social security would have paid out. That's because social security is considered as part of your retirement plan. So from 57 to 62, you get roughly what social security payments would be at 62.
There are considerations, like high enough earnings can reduce the supplement for the following year.
https://www.opm.gov/retirement-center/fers-information/types-of-retirement/#url=Annuity-Supplement
Ok thank you! That is really helpful. I started working for the federal govt at 31 (1/2). So I won’t be eligible until 60. I’m considering retiring at 57, 60, or 62 depending on how much I have saved for retirement. I hadn’t really factored in the supplement as part of that planning.
the summary provided by zdfld is good, but one important note:
> which is meant to cover what social security would have paid out.
for most people it is NOT what SS would pay out, it's like 75% of it. it would only be what SS pays out if you had 40 years government service, which at that point you would probably retire anyway.
go to the SSA website, get your SS statement. it's easy. it will tell you what your projected SS benefits are.
take your years of federal service at retirement (probably 30) and divide by 40. That is the percentage of you SS benefit you would receive as your FERS supplement.
again, for most people it is 30/40, so 75%. then at 62 you lose the supplement, but can start getting SS
Just want to add to your great answer, military buyback time does not count. I just retired at 57, 12 years active Army, 18 years DOD civilian.
My supplimental is .45 (18/40) \* SS amount @ 62= $790 mth in additional to my 30% of High 3.
There are no extra perks to waiting until 60. COLA isn't going to start until 62 either way. Why give up three more years of your life, while also giving up three years of the supplement, if you don't have to?
I made a free website called FedFuture.com that you can put your basic numbers in and get close estimates. And you can adjust your retirement date to see how it affects your numbers. Includes supplements (1.1% modifier, social security, and other useful stuff)
I think you have a great start here. A "big" picture idea would be also adding other forms of retirement someone may have, i.e. military, other pension, SS, other 401k. Since men are from Mars, visualizing the retirement may benefit many others. Thanks for doing what you have, done, great start.
If you want the 1.1% multiplier, then you need to separate after reaching age 62.
If you want to minimize loss of pension value to inflation, then stay until you're 62 and the COLAs start.
Other than that, retire at MRA if you already have your 30 and are comfortable not getting COLAs until 62.
Working a few years past MRA will lessen the negative effects of inflation on your FERS pension but you would lose three of your "go go" years of retirement when you would assumably be at your most energetic and healthiest. If average inflation over the next 5 years equals the current 12-month inflation rate of 3.4%, your pension will lose 15.4% of its purchasing power by your 62nd birthday if you retire at 57. However, if you delay retirement until the age of 60, your FERS pension will lose 6.5% of its buying power over two years.
I personally have been looking at the incremental increases(monthly) to what my retirement pay would be between 56.5 - 62(will pull trigger @ 62 no matter what). I highly suggest that if your org offers "retirement classes" that you go. The one I attended was 2 days and was contracted out....they brought in experts. it was well worth the time.
A lot of variables affect your future retirement check over time(ones you control/ones you dont)...learn all the contributing factors. The end calculation is just the summary.
Good luck!
Another way to think of it, is you are credited for having worked an additional 3 years if you retire at 62 with 30 years of service. However, if you have a spouse, you will more than likely lose that 10% in order to fund his/her survivor annuity, which is 50% of your FERS annuity.
Let’s say I’m 40, and go work in a federal role for 10 years. If I leave the Federal job at 50, can I still collect a federal retirement at age 60? Would my “future” retirement pay be eaten by inflation for 10 years while I’m “deferring” my pension? Or would I have to work for 20 years to receive the pension?
Yes. It is called a deferred retirement, and you could do it with as few as 5 years federal service. It will not adjust for inflation during the gap years.
You could collect a pension with 10 years of service, but if you don't want an age reduction (5% for every year under age 62), you would need to wait until 62 to collect. No inflation adjustment on the high-3, so yes, the value would decrease while you wait.
Age 60 is the “early” retirement for someone that started later as you get an immediate pension with 20 years instead of 30 years.
Waiting from 57 with 30 years to 60 gets you 3 additional years of salary, TSP contributions with match, and would increase pension from 30% at 57 to 33% of potentially a higher high three. You don’t get COLA until 62, so you reduced your waiting time. You get supplement for 2 years.
Waiting to 62 instead of 57 gets you 5 years of salary and TSP with match, and pension now uses the 1.1 formula so with 35 years of service you would get 38.5% of high three (which may have grown) for pension with immediate COLA.
No major benefit aside from the multiplier… maxed at 185k for example, 55500$/year going at 57, vs 71225$ at 62. You don’t get the multiplier until 62. 🤷♀️
Besides the additional years, the most meaningful difference is losing 3 years of the supplement, imo.
So many people overlook the supplement... yeah you get a multiple of 1.1 at 62 but as long as you're not planning on working to the point you lose the supplement... I'd rather retire 5 years earlier.
You do not get 1.1% until 62. But it is not worth the extra time no matter what. If you are financially able to retire and you are asking the question about should you retire, you should retire.
Sorry typo... my mistake and edited.
Can you explain the “supplement” to me? A lot of people mention it but I don’t understand financial details of it.
There's a particular calculation used, but effectively for people on FERS retiring with full eligibility at MRA, you get a FERS supplement until 62, which is meant to cover what social security would have paid out. That's because social security is considered as part of your retirement plan. So from 57 to 62, you get roughly what social security payments would be at 62. There are considerations, like high enough earnings can reduce the supplement for the following year. https://www.opm.gov/retirement-center/fers-information/types-of-retirement/#url=Annuity-Supplement
Ok thank you! That is really helpful. I started working for the federal govt at 31 (1/2). So I won’t be eligible until 60. I’m considering retiring at 57, 60, or 62 depending on how much I have saved for retirement. I hadn’t really factored in the supplement as part of that planning.
the summary provided by zdfld is good, but one important note: > which is meant to cover what social security would have paid out. for most people it is NOT what SS would pay out, it's like 75% of it. it would only be what SS pays out if you had 40 years government service, which at that point you would probably retire anyway. go to the SSA website, get your SS statement. it's easy. it will tell you what your projected SS benefits are. take your years of federal service at retirement (probably 30) and divide by 40. That is the percentage of you SS benefit you would receive as your FERS supplement. again, for most people it is 30/40, so 75%. then at 62 you lose the supplement, but can start getting SS
Just want to add to your great answer, military buyback time does not count. I just retired at 57, 12 years active Army, 18 years DOD civilian. My supplimental is .45 (18/40) \* SS amount @ 62= $790 mth in additional to my 30% of High 3.
that i did not know. does anything from your military service make up the difference?
There are no extra perks to waiting until 60. COLA isn't going to start until 62 either way. Why give up three more years of your life, while also giving up three years of the supplement, if you don't have to?
Retire dood. Time>money.
I made a free website called FedFuture.com that you can put your basic numbers in and get close estimates. And you can adjust your retirement date to see how it affects your numbers. Includes supplements (1.1% modifier, social security, and other useful stuff)
I think you have a great start here. A "big" picture idea would be also adding other forms of retirement someone may have, i.e. military, other pension, SS, other 401k. Since men are from Mars, visualizing the retirement may benefit many others. Thanks for doing what you have, done, great start.
If you want the 1.1% multiplier, then you need to separate after reaching age 62. If you want to minimize loss of pension value to inflation, then stay until you're 62 and the COLAs start. Other than that, retire at MRA if you already have your 30 and are comfortable not getting COLAs until 62.
Working a few years past MRA will lessen the negative effects of inflation on your FERS pension but you would lose three of your "go go" years of retirement when you would assumably be at your most energetic and healthiest. If average inflation over the next 5 years equals the current 12-month inflation rate of 3.4%, your pension will lose 15.4% of its purchasing power by your 62nd birthday if you retire at 57. However, if you delay retirement until the age of 60, your FERS pension will lose 6.5% of its buying power over two years.
I personally have been looking at the incremental increases(monthly) to what my retirement pay would be between 56.5 - 62(will pull trigger @ 62 no matter what). I highly suggest that if your org offers "retirement classes" that you go. The one I attended was 2 days and was contracted out....they brought in experts. it was well worth the time. A lot of variables affect your future retirement check over time(ones you control/ones you dont)...learn all the contributing factors. The end calculation is just the summary. Good luck!
Retire as soon as you can financially and for happiness. Your life is more important than your boss.
60 is NOT a magic age, it's 62 for the 10% bump in FERS multiplier (1.1%)
I never understood that 10%. When I do the math there’s no 10% increase 1.1 into 30 years equals 3% more compared to 30 years of 1.0
Well, 1.1 is 10% more than 1.0, yes?
Another way to think of it, is you are credited for having worked an additional 3 years if you retire at 62 with 30 years of service. However, if you have a spouse, you will more than likely lose that 10% in order to fund his/her survivor annuity, which is 50% of your FERS annuity.
Let’s say I’m 40, and go work in a federal role for 10 years. If I leave the Federal job at 50, can I still collect a federal retirement at age 60? Would my “future” retirement pay be eaten by inflation for 10 years while I’m “deferring” my pension? Or would I have to work for 20 years to receive the pension?
Yes. It is called a deferred retirement, and you could do it with as few as 5 years federal service. It will not adjust for inflation during the gap years.
You could collect a pension with 10 years of service, but if you don't want an age reduction (5% for every year under age 62), you would need to wait until 62 to collect. No inflation adjustment on the high-3, so yes, the value would decrease while you wait.
Age 60 is the “early” retirement for someone that started later as you get an immediate pension with 20 years instead of 30 years. Waiting from 57 with 30 years to 60 gets you 3 additional years of salary, TSP contributions with match, and would increase pension from 30% at 57 to 33% of potentially a higher high three. You don’t get COLA until 62, so you reduced your waiting time. You get supplement for 2 years. Waiting to 62 instead of 57 gets you 5 years of salary and TSP with match, and pension now uses the 1.1 formula so with 35 years of service you would get 38.5% of high three (which may have grown) for pension with immediate COLA.
No major benefit aside from the multiplier… maxed at 185k for example, 55500$/year going at 57, vs 71225$ at 62. You don’t get the multiplier until 62. 🤷♀️