Retirement annuity


Q. I have a curiosity question. If I retire at my minimum retirement age of 56 with 27 years of service, how does the 5 percent penalty reduction work? It is a little confusing as to how it is worded. Lets say that my annuity is $15,000; does that mean each year I would get $14,250 instead? Will it be 5 percent for each year until I reach age 62, then no penalty? And would I be eligible for the supplemental income?

A. The 5 percent penalty for every year you are under age 62 is a one-time permanent reduction. Using your age and annuity estimate, instead of receiving an annuity of $15,000, you would receive $10,500. Any cost-of-living increases after you reached age 62 would be computed from that base annuity figure. So, for example, if there were a 2 percent increase, your new annuity would be $10,710.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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