5 percent penalty

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Q. I will be 60 years old in February. I will have 16 years and five months of total service with Customs and Border Protection and am covered for retirement with FERS.  What does the 5 percent penalty mean “if I retire under the age of 62”? Does this apply only to my Social Security benefits or my FERS retirement? I will not ask for any Social Security benefits until I reach the age of 62. I am also retired from the military with 20 years of total service.

A. Because you have fewer than 20 years of service, you’d be retiring under the MRA+10 provision (minimum retirement age with at least 10 years of service). As such, your annuity would be reduced by 5 percent for every year you are under age 62 (5/12 percent per month). The fact that you are retired military is irrelevant.

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  1. Another option not discussed is to combining 20 years plus 16 would give 36 years and no 5% reduction because the MRA for 30 years is 56.

  2. Another option not discussed is to combining 20 years plus 16 would give 36 years and no 5% reduction because the MRA for 30 years is 56.

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