FERS Retirement: Turning 62 is a Financial Celebration

What is the magic retirement age for government employees? A federal career is packed with milestones. Everyone fears getting older, but turning 62 in the federal government may be a financial celebration. That doesn’t apply to federal personnel who are required to retire at the age of 57, such as law enforcement, firefighters, and air traffic controllers, and reaching 62 has no impact on reaching your Minimum Retirement Age (MRA).

Federal employees who meet certain years of service and age requirements may be eligible for a Federal Employees Retirement System (FERS) annuity. The Minimum Retirement Age (MRA) is determined by your birth year. Most employees’ MRA might be between the ages of 55 and 57. If you met your MRA and have enough years of service, you can continue your Federal Employees Health Benefits (FEHB) in retirement.

They also get a Social Security supplement from the Office of Personnel Management (OPM), which is a reduced portion of their estimated Social Security computation at age 62. This amount is determined by the number of years of federal service and the estimated SSA pension at 62. If they opt to retire between 55/57 and 61, the Social Security supplement is included in their FERS pension. The Social Security supplement ends at the age of 62. A retired employee then has the choice of electing their SSA benefit at the age of 62 or deferring that decision until later.

The government offers a substantial reward if you can postpone retiring until 62. Let’s consider this example: two government employees who each earn $100,000 and have 30 years of service. If an employee retires at 60, their FERS pension will be $30,000 per year. If the other employee is 62, their annual pension is $33,000. That’s because when a federal employee reaches the age of 62, their FERS multiplier increases from 1.0 to 1.1, resulting in a 10% increase in their annuity. If an employee works past 62, the 1.1 multiplier remains with them. Many employees who retire before reaching 62 are ignorant of this advantage and are unaware they’re leaving a substantial amount of money behind.

So, why is the government acting in this way? Because, in the preceding example, the federal government wasn’t required to pay the Social Security supplement when you retire at 62. The supplement would be paid from the age of 60 to the age of 62. The 10% increase in the annuity at 62 is a financial incentive for employees to work until they’re 62. That’s correct; an incentive. It’s another option to consider while deciding whether or not to retire from federal employment. So, before you retire, consider your financial options.

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Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.

Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.

Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.

Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.

Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.

With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.