Q. I have seen a lot of responses, but none answers my question directly. I would like to retire at 56 under FERS. I will have 26 years in the government. I have asked this question about the penalty and am still very confused. If I retire at 56, will I be penalized for every year under 60 or 62 and is it accumulative to equal 35 percent of my retirement if age is less than 62 years old? I know you have been asked this a thousand times, but I am trying to get some clarity.
A. Because you wouldn’t meet the age and service requirements for an immediate, unreduced annuity, you would could only retire under the MRA+10 provision (minimum retirement age with between 10 and 29 years of service). If you did that, your annuity would be reduced by 5 percent for every year you were under age 62. You could lessen or eliminate the age penalty by postponing the receipt of your annuity until a later date. As an alternative, you could simple resign from the government and later apply for a deferred annuity. Because you have at least 20 years of service, you would be eligible for an annuity at age 60. Among the downsides to this approach are that you would neither be eligible for the special retirement supplement between the commencing date of your annuity and age 62 when you became eligible for a Social Security benefit nor be eligible to re-enroll in the Federal Employees Health Benefits program.