Deferred annuity

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Q. I want to retire at age 57 with 28 years federal service and receive my health benefits but defer the annuity until age 62. Is that possible? My co-workers say I should work until age 59 with 30 years federal service and begin collecting all benefits then. What would the difference in the benefits be?

A. You could retire under the MRA+10 provision and, if you were enrolled in the Federal Employees Health Benefits program for the five consecutive years before you retired, continue your health benefits coverage. However, your annuity would be reduced by 5 percent for every year you were under age 62. If you decided to delay the receipt of your annuity to reduce or eliminate the age penalty, you would be given 31 days of premium-free FEHB coverage and have the option of paying the entire amount, plus 2 percent for administrative costs, for up to 18 months. When your annuity began, you could re-enroll in the FEHB program. Note: Regardless of when your annuity began, it would be based on the amount you were entitled to on the day you retired. You can see what that would be by using the following formula; .01 x your high-3 on the day you left x your years and full months of service on the day you left. As noted above, receiving that annuity before age 62 would reduce the benefit by 5 percent per year (5/12 percent per month).

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