Question about Fed Retirement

[Anonymous]

On OPM, the minimum retirement age is 57 (if you were born after 1970). The FERS annuity seems reasonable = high-3 average * years in service *1%.

My question is why don't more Fed employees retire at 57, then take part time jobs as contractors? With the FERS annuity and a part time salary, it might not be much less than what they are currently earning.

I'm in my early 30s and just looking for career options. Thanks

[Anonymous]

Because a lot of people have had other (non-federal) jobs and don't have 30 years of service and they want to get their full retirement pension.

"If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later."
http://www.opm.gov/retirement-services/fers-information/eligibility/

[Anonymous]

Anonymous wrote:Because a lot of people have had other (non-federal) jobs and don't have 30 years of service and they want to get their full retirement pension.

"If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later."
http://www.opm.gov/retirement-services/fers-information/eligibility/

When I'm 57, I'll have 35 years of service. I started straight out of college.

[Anonymous]

A lot of people also would like to continue receiving full paychecks for a few more years. Some people do not realize that you can not take another full-time (40 hrs/week) job at 58yo and draw pension immediately. Pension is delayed until 62 if you don't want the reduction penalty.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Because a lot of people have had other (non-federal) jobs and don't have 30 years of service and they want to get their full retirement pension.

"If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later."
http://www.opm.gov/retirement-services/fers-information/eligibility/

When I'm 57, I'll have 35 years of service. I started straight out of college.

Yuck! So, you don't know anything else. I have twenty years of non-government work. I will have to work until I am 65 to receive the 20 year pension. I believe I am required to work an extra year to receive the 1.1% opposed to the 1% per year. If I can handle the lack of pay increases and bonuses, I will verify that information closer in time. I stay because the flexibility (telework, flex hours, leave accrual) is generous compared to private sector. I need it for my family life.

[Anonymous]

Anonymous wrote: A lot of people also would like to continue receiving full paychecks for a few more years. Some people do not realize that you can not take another full-time (40 hrs/week) job at 58yo and draw pension immediately. Pension is delayed until 62 if you don't want the reduction penalty.

Don't they receive a social security supplement to fill in the gap?

[Anonymous]

Anonymous wrote: A lot of people also would like to continue receiving full paychecks for a few more years. Some people do not realize that you can not take another full-time (40 hrs/week) job at 58yo and draw pension immediately. Pension is delayed until 62 if you don't want the reduction penalty.

Is this just for federal government workers? People who retire from the military, state and local fire and police departments receive full pensions while working FT at new occupations.

[Anonymous]

My question is why don't more Fed employees retire at 57, then take part time jobs as contractors? With the FERS annuity and a part time salary, it might not be much less than what they are currently earning.

The simple answer is, feds are eligible at 57 for a reduced pension. Full pension comes at 62. If you stay the extra five years, the muliplier is also increased from 1% per year to 1.1% per year. It almost never makes any sense to bail at 57 for another job.

[Anonymous]

Finding a new job at 57 comes with its own challenges. (Especially in today's job market with contractors being forced to downsize due to federal budget cuts.)