Q. I am an active federal employee with eight years active-duty military behind me, for which I haven’t made a deposit. I have 14 years total service and want to optimize my potential for retirement benefits and most of what I have read is very hard to understand. What I am looking at are my options as to when I can retire and the negative effects of that decision based on each specific date and time in service.
1. I was thinking of retiring at 49 years old, which would give me 30 years federal service. Are there any benefits to this scenario. What would be the negative effects of such a decision?
2. I considered retiring at 55 years old, which would give me 36 years federal service. Would this be more beneficial to me from a pros and cons aspect?
3. What if I went to 57 years old, which would give me 38 years service?
A. Taking your scenarios in order: 1). The only way you could retire at age 49 is if your agency offered you an opportunity to retire early and you had at least 25 years of creditable service, which would include active-duty service if you made a deposit for that time. If you were offered an early-out and met the age and service requirements, you wouldn’t be hit by the age penalty, which applies to anyone retiring under the MRA+10 provision (minimum retirement age with at least 10 but fewer than 30 years of service).
2). Barring an offer of early retirement, the only way you could retire at age 55 is if you were born before 1948. MRAs range from 55 to 57 depending on your year of birth. Therefore, I doubt that the age 55 scenario applies to you.
3). Assuming that your MRA is 57, you could retire with at least 30 years of service. Obviously, the more years of service you have, the larger your annuity will be. Use the standard formula to figure out the difference between retiring at one point in time or another: 0.01 x your high-3 x all years of service. If you retire at age 62 and have at least 20 years of service, the multiplier would be increased to 0.011.
