FAA and LEO Employees Have Special Retirement Rules—That Make Planning Even More Critical

Key Takeaways

• FAA and LEO employees have unique retirement rules that let you retire earlier, but those rules come with strict eligibility conditions and penalties if not carefully followed.

• Planning around age, service years, and mandatory retirement rules is essential to protect your benefits and avoid costly missteps.

Why Retirement Rules for FAA and LEO Employees Are Different

As an FAA or Law Enforcement Officer (LEO) employee, your retirement system under FERS isn’t like that of most government workers. You are considered a “special category employee,” and with that designation come different timelines, benefits, and mandatory exit points. These differences are designed to reflect the physically and mentally demanding nature of your job, but they also require a far more deliberate approach to planning.

You are eligible for retirement earlier than most FERS employees, but that earlier retirement age comes with mandatory minimums and maximums. In 2025, many employees overlook how a small error—like a few months of missed service credit or misunderstanding the age cutoffs—can permanently reduce retirement income.

Retirement Eligibility: What Applies in 2025

Here’s how retirement eligibility works right now:

For LEO Employees:

• Immediate Retirement: Age 50 with 20 years of qualifying LEO service.

• Any Age Retirement: With 25 years of qualifying LEO service, regardless of age.

• Mandatory Retirement: Age 57, if you have at least 20 years of service.

For FAA Employees (Air Traffic Controllers):

• Immediate Retirement: Age 50 with 20 years of ATC service.

• Any Age Retirement: With 25 years of ATC service.

• Mandatory Retirement: Age 56 for most ATC positions.

In both categories, if you are under the mandatory retirement age and meet one of the service requirements, you can leave with an unreduced annuity. But timing is everything.

The Special Annuity Formula

As of 2025, LEOs and FAA employees receive a more generous pension formula under FERS:

• 1.7% x High-3 x First 20 Years

• 1.0% x High-3 x Additional Years

For example, if you serve 25 years, the first 20 are calculated at the 1.7% rate, and the remaining 5 at 1.0%. That means your annuity can grow more quickly than a standard FERS employee’s pension, especially if you retire shortly after reaching eligibility.

Your High-3 is the average of your highest-paid consecutive 36 months. Many FAA and LEO employees aim to work high-paying overtime or premium assignments during this period to boost their average.

FERS Special Retirement Supplement (SRS)

If you retire before age 62 and are eligible for an immediate unreduced annuity, you also qualify for the FERS Special Retirement Supplement. This benefit bridges the gap until you become eligible for Social Security.

But it comes with limitations:

• It ends at age 62 whether or not you claim Social Security.

• Earnings Limit Applies: In 2025, the earnings limit is $23,480. Income above that reduces your SRS by $1 for every $2 over the limit.

• It’s Not Available if you retire under MRA+10 or in a phased retirement scenario.

If you plan to work a post-retirement job, you must factor this in. Exceeding the earnings limit could significantly reduce your supplement.

Mandatory Retirement: What You Cannot Avoid

Both FAA and LEO employees face mandatory retirement, meaning you must retire by law at a certain age:

• FAA (ATC): Age 56

• LEO: Age 57

If you don’t have 20 years of service by this point, you may not qualify for the full enhanced retirement. That’s why service time tracking and proper documentation are critical.

There are rare exceptions to delay mandatory retirement by up to 3 years, but these must be granted by the agency and typically only apply in staffing emergencies.

Sick Leave and Military Time Credit

If you have unused sick leave at retirement, it counts toward your total creditable service but does not help you reach the 20-year minimum for enhanced LEO or FAA retirement. It’s used to increase your annuity, not to make you eligible.

Military service time can be credited if you make a deposit to FERS (called a military buyback). But again, unless that time was served in a qualifying FAA or LEO role, it will not count toward the 20 years needed for enhanced benefits.

Health and Life Insurance Eligibility

FEHB and FEGLI coverage into retirement still follow the general rules:

• You must be enrolled in FEHB for the 5 years before retirement to carry it forward.

• FEGLI options can become very expensive with age, especially Option B and C.

• If you are retiring before age 62, your annuity must be sufficient to cover premiums; otherwise, you may need to pay them directly.

For LEOs and FAA employees who retire before the standard federal retirement age, budgeting for premiums in early retirement years is key.

TSP Considerations for Early Retirement

Since many FAA and LEO employees retire before age 59½, it’s important to understand how Thrift Savings Plan (TSP) rules work for early access:

• If you retire in or after the year you turn 50, you can take penalty-free withdrawals from your TSP.

• If you separate before age 50, you’ll face a 10% early withdrawal penalty on most distributions unless you use a method like Substantially Equal Periodic Payments (SEPP).

You can also convert TSP funds to a Roth IRA, but timing matters. Conversions are taxable, and you need to plan for the income hit, especially if you’re receiving a pension and SRS.

Social Security Timing Is Still a Factor

Even with the SRS available, you should still plan your Social Security claiming strategy.

• Full Retirement Age (FRA) in 2025 is 67 for those born in 1963.

• Claiming early at 62 results in about a 30% reduction in monthly benefits.

• Delaying past FRA increases your benefits by 8% per year until age 70.

Since the SRS ends at 62, many retirees feel pressured to claim early. But if you can budget carefully, delaying Social Security can lead to much higher lifetime benefits.

Disability Retirement Differences

If you are injured or medically unable to perform your duties, you may qualify for FERS Disability Retirement.

Special category employees like LEOs and FAA staff are held to a stricter standard: you must be unable to perform your specific duties rather than being disabled from any federal job.

Also, the 20-year service requirement for enhanced benefits does not apply to disability retirements. The calculation reverts to the regular FERS formula unless you meet the service minimums.

Planning Pitfalls to Avoid

Several planning missteps could jeopardize your retirement income:

• Assuming all service counts: Only qualifying LEO or FAA service earns enhanced benefits.

• Missing mandatory age deadlines: If you don’t act on time, you may lose eligibility.

• Underestimating FEHB costs in early retirement: Premiums can eat into your budget before Medicare kicks in.

• Forgetting the SRS earnings limit: Extra income can reduce or eliminate this benefit.

• TSP withdrawals without penalty analysis: You could pay more in taxes and penalties than necessary.

Double-checking your service records, confirming retirement eligibility with your agency, and estimating benefit income are essential steps.

How to Get the Timing and Strategy Right

If you’re within 5 years of retirement, now is the time to:

• Request a full retirement estimate from your agency.

• Review your certified service history.

• Project your High-3 average salary.

• Check TSP withdrawal strategies and penalty thresholds.

• Consider survivor benefit elections and their cost.

• Run multiple budget scenarios: pre-62, post-62, and post-67.

It’s also wise to review your FEHB plan’s retiree options, premium costs, and how Medicare will eventually integrate.

Your Retirement Rules Require More Than a Guess

With mandatory retirement ages, strict service requirements, and enhanced benefit formulas, you don’t have the luxury of vague planning. A one-size-fits-all approach doesn’t work when your entire system was built for early exit.

You need a retirement strategy that reflects the realities of 2025, not outdated assumptions. Get personalized advice from a licensed professional listed on this website who understands how FAA and LEO retirement rules actually work.