3 Reasons Why Federal Employees Retire At 57

Why Federal Employees Retire At Age 57

An important part of establishing your retirement plan is choosing the best age to retire. While the average retirement age for federal employees is 62 (61.8 according to OPM), there is no magic age that works for everyone. Hence, it could make sense for some to retire earlier or later, and the right age will depend on your financial situation, needs, and goals. There are, however, three reasons why some federal employees retire at age 57. Read on to learn the three reasons why age 57 or thereabouts might be the right retirement age for you.

1. Minimum Retirement Age (MRA)

Your minimum retirement age (MRA) is the earliest age you can retire with 10 to 29 years of service and receive an immediate reduced pension or an unreduced pension after 30 years of service. Your MRA ranges between age 55 and 57 and is based on your birth year. Since all federal employees would have reached their MRA by 57, many of those who have been dreaming of that sandy white beach will say goodbye to the federal government at this age.

You can find your MRA by checking the table below:

2. No Social Security, No Problem

Although federal employees retiring at age 57 won’t be eligible for Social Security, they might be eligible for the FERS Supplement. The FERS Supplement or Special Retirement Supplement (SRS) is paid in addition to your pension and is available to certain federal employees who retire before age 62. To be eligible for the SRS, you must be under age 62 and eligible for immediate unreduced retirement. Meaning those retiring at their MRA with 30 years of service will be eligible for the SRS. To learn more about the FERS Supplement, read this article.

Federal employees who retire under the MRA+10 provision, deferred retirement, or disability retirement aren’t eligible for the SRS.

3. No Early Withdrawal Penalties

Lastly, while distributions from IRAs prior to age 59½ are subject to a 10% penalty (with certain exceptions), if you’re a federal employee who separates from service at age 55 or older, you can take penalty-free withdrawals from your TSP. Thus, federal employees retiring at 57 will be able to tap into their TSP penalty-free. To learn about other TSP withdrawal options, read this article.

Note: Special Category Employee (Law Enforcement, Air Traffic Control, Firefighters, etc.) can separate from service at age 50 or older and take penalty-free withdrawals.

Final Thoughts

A critical part of building your retirement planning strategy is choosing the right retirement age. And although I have laid out some reasons why federal employees might retire at 57, the right retirement age should be based on your financial situation, needs, and goals. If you need help sorting through all the factors that go into making a wise decision about when to retire, consult with a qualified financial planner.

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2023 Legislative Change Notice

The SECURE ACT 2.0 passed and impacted many of the articles on this website. While the articles were correct when written, it’s impossible to re-write every article. Please consult a qualified professional (i.e., CFP®, CPA, or attorney) before implementing any strategy.

Published by Jose Armenta, MsBA, CFP®, ChFC®, EA

Jose Armenta is a CERTIFIED FINANCIAL PLANNER™ professional who specializes in helping federal employees get the most out of their federal benefits. Jose’s experience serving federal employees has provided him with valuable insight into federal employees' unique financial planning needs.

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