The MRA+10 Option: Is It the Early Retirement Shortcut You’ve Been Waiting For?

Key Takeaways

1. The MRA+10 option lets you retire early under FERS, but it comes with a reduction to your pension unless you delay benefits.

2. It’s a flexible choice for those who need to leave the workforce early but still want a safety net.

What is MRA+10, and How Does It Work?

The MRA+10 retirement option under the Federal Employees Retirement System (FERS) is designed to offer flexibility to federal employees who wish to retire early. If you’re at least at your Minimum Retirement Age (MRA) and have completed at least 10 years of federal service, you qualify for this retirement pathway.

Your MRA depends on your year of birth, typically ranging from 55 to 57 years. For example, if you were born in 1970 or later, your MRA is 57. MRA+10 offers the opportunity to step away from work before the standard 30 years of service or the age 62 thresholds.

But there’s a catch: your pension will be reduced by 5% for each year you are under age 62 unless you postpone receiving benefits.

Why Choose MRA+10?

Sometimes, life demands flexibility. Whether you’re considering MRA+10 to care for loved ones, transition into another career, or simply take a break, this option can be a lifesaver. Here’s why it appeals to many federal employees:

• Immediate Departure: You don’t have to meet the usual service requirements for an unreduced pension.

• Health Benefits: You may keep your Federal Employees Health Benefits (FEHB) if you’re eligible and continue to receive them into retirement.

• TSP Access: Retiring under MRA+10 allows you to access your Thrift Savings Plan (TSP) funds, subject to certain rules.

While the pension reduction can be a drawback, it’s offset by the ability to leave the workforce earlier when circumstances demand it.

How is the MRA+10 Pension Calculated?

The FERS annuity formula calculates your pension based on your High-3 average salary and years of service. For MRA+10, this formula remains the same:

Annual Pension = High-3 Salary × Years of Service × 1%

If you’re retiring at age 62 with 20 or more years of service, the multiplier increases to 1.1%. However, under MRA+10, your pension is subject to a 5% reduction for each year you’re under 62 unless you delay receiving your benefits. For example:

• Retiring at age 57 with a $90,000 High-3 salary and 20 years of service:

  • Pension: $90,000 × 20 × 1% = $18,000/year.

  • Reduction: 5% × 5 years = 25%.

  • Final Pension: $18,000 − $4,500 = $13,500/year.

This reduction applies unless you defer your annuity until reaching age 62.

Deferring Benefits to Minimize Reductions

One way to avoid the 5% penalty is by delaying the start of your pension. If you meet the MRA+10 criteria but don’t need immediate income, you can defer your annuity until you reach age 62.

By postponing your benefits, you can:

• Eliminate the 5% Reduction: Waiting until 62 ensures you receive your full pension without penalties.

• Maintain FEHB Eligibility: You remain eligible for FEHB if you were enrolled in it for the five years before retirement and elect to begin your annuity later.

However, delaying benefits means forgoing immediate income, so it’s important to assess your financial situation before making this choice.

What About Health Insurance?

FEHB is a major consideration for federal retirees, and MRA+10 can complicate your eligibility if you’re not careful. To keep your FEHB benefits in retirement:

1. You must be enrolled in FEHB for at least five years before retiring.

2. You need to start receiving your annuity immediately upon retirement, or you can elect to defer it while ensuring FEHB continuity.

Losing access to FEHB can be a significant financial blow, so make sure you understand the conditions before deciding to retire under MRA+10.

The Impact on Social Security

FERS employees contribute to Social Security throughout their careers. Under MRA+10, you can claim Social Security benefits starting at age 62, though early retirement will result in reduced benefits.

If you decide to work after retiring under MRA+10, be aware of the Social Security earnings limit, which caps how much you can earn before your benefits are reduced. In 2025, this limit is $23,400 for those under full retirement age.

TSP Considerations

Your TSP plays a crucial role in funding your retirement. Under MRA+10, you can access your TSP funds without penalty at your MRA, provided you retire in the calendar year you reach it. However, remember that:

• Taxes Apply: Withdrawals from your traditional TSP are subject to income tax.

• Savings Longevity: Withdrawing early can deplete your retirement savings faster, so it’s important to plan withdrawals carefully.

Is MRA+10 Right for You?

MRA+10 isn’t the best option for everyone. Here are some factors to consider:

• Financial Readiness: Can you afford the reduced pension or delay benefits until age 62?

• Health Benefits: Have you met the requirements to continue FEHB coverage?

• Retirement Goals: Are you ready to leave federal service, or could you benefit from working longer to increase your pension?

Weighing these factors against your personal and financial needs will help you decide if MRA+10 is the right choice.

Alternatives to MRA+10

If MRA+10 doesn’t fit your needs, other retirement options may be available:

• Immediate Retirement: If you have 30 years of service at your MRA or 20 years at age 60, you qualify for an immediate pension without reductions.

• Deferred Retirement: If you leave federal service before meeting retirement eligibility, you can defer your benefits until reaching the required age.

• Disability Retirement: If you’re unable to continue working due to a medical condition, you may qualify for FERS disability retirement.

Exploring these alternatives ensures you choose the best retirement path for your situation.

Maximizing Your Retirement Potential

To make the most of your retirement under MRA+10, consider these strategies:

1. Boost Your High-3 Average: Seek promotions or high-paying roles in your final years of service to maximize your pension.

2. Plan TSP Withdrawals: Work with a financial planner to create a sustainable withdrawal strategy.

3. Understand Health Insurance: Ensure you meet FEHB requirements and consider how Medicare might fit into your future healthcare needs.

4. Evaluate Post-Retirement Work: Part-time work can supplement your income while allowing you to defer your pension.

These steps can help you transition smoothly into retirement while protecting your financial security.

A Flexible Option for the Right Situation

MRA+10 offers flexibility and early access to retirement benefits, but it’s not without trade-offs. By understanding the eligibility criteria, pension reductions, and impact on your health insurance and TSP, you can make an informed decision.

If you plan carefully, MRA+10 can be a valuable tool for achieving your retirement goals, even if it means making some compromises.