Yes, you may be able to retire at 57 with 20 years of federal service under the Federal Employees Retirement System (FERS), though it would likely be with a reduced immediate annuity.
Understanding FERS Retirement Eligibility
The Federal Employees Retirement System (FERS) outlines specific age and service requirements for employees to be eligible for retirement benefits. Your ability to retire at 57 with 20 years of service depends on these rules, particularly your Minimum Retirement Age (MRA) and the type of annuity you're seeking.
The general eligibility criteria under FERS for an immediate, unreduced annuity are:
| Retirement Type | Age Requirement | Service Requirement | Benefit |
|---|---|---|---|
| Full Annuity | Minimum Retirement Age (MRA) | 30 years | Unreduced |
| 60 | 20 years | Unreduced | |
| 62 | 5 years | Unreduced | |
| Reduced Annuity | Minimum Retirement Age (MRA) | 10 years | Reduced by 5% per year |
Your Minimum Retirement Age (MRA) is determined by your birth year and typically falls between 55 and 57. For instance, if you were born in 1968 or later, your MRA is 57. If you were born earlier, your MRA might be lower.
Retiring at 57 with 20 Years of Service: The MRA+10 Provision
Given that you have 20 years of federal service, you do not meet the "60 with 20 years" criterion for an unreduced retirement if you are only 57. However, you may qualify under the "MRA with 10 years" rule, which allows for retirement with a reduced annuity.
Here’s how it applies:
- If 57 is your MRA: If your Minimum Retirement Age is 57 (meaning you were born in 1968 or later), and you have 20 years of service (which is more than the minimum 10 years required), you are eligible to retire.
- The Reduction: This type of retirement, often called an MRA+10 retirement, results in a permanent reduction to your FERS annuity. The reduction is typically 5% for each year (or 1/12 of 5% for each month) you are under the age of 62.
Calculating the Annuity Reduction
To illustrate the reduction, if your MRA is 57 and you retire at that age with 20 years of service, your annuity would be reduced by:
- Age difference: 62 (full benefit age) - 57 (your age) = 5 years
- Total reduction: 5 years * 5% per year = 25% reduction.
This means your FERS annuity would be reduced by a substantial 25% for the rest of your life.
Considerations for an MRA+10 Retirement
Before making a decision, consider these factors:
- FERS Special Retirement Supplement (SRS): If you retire under the MRA+10 provision, you typically do not receive the FERS Special Retirement Supplement (SRS) until you reach age 62. The SRS is designed to bridge the income gap until you become eligible for Social Security benefits.
- FEHB and FEGLI: Your ability to continue your Federal Employees Health Benefits (FEHB) and Federal Employees Group Life Insurance (FEGLI) in retirement is generally protected if you retire with an immediate annuity, even if it's reduced.
- Financial Planning: A 25% permanent reduction in your annuity can significantly impact your retirement income. It's crucial to have a comprehensive financial plan that accounts for this reduced income, alongside Social Security and any personal savings.
Alternatives to an Immediate Reduced Retirement
If retiring at 57 with a reduced annuity doesn't align with your financial goals, consider these alternatives:
- Postponed Retirement: You could resign from federal service at age 57 with 20 years of service (provided 57 is your MRA), but postpone the commencement of your FERS annuity until a later date (e.g., age 60 or 62) to avoid or lessen the reduction. If you postpone until age 60 with 20 years of service, your annuity would be unreduced.
- Continue Working: Continuing to work until age 60 would allow you to retire with 23 years of service (assuming 20 years now) and receive an unreduced annuity under the FERS "60 with 20" rule. This would also likely increase your annuity amount due to more years of service and a higher high-3 average salary.
- Consult a Financial Advisor: Given the complexities of federal retirement benefits and the long-term impact of reductions, consulting a qualified financial advisor specializing in federal benefits can provide personalized guidance.
For official information regarding FERS eligibility and benefits, you can refer to resources from the U.S. Office of Personnel Management (OPM).
