Federal employees pay a portion of their paychecks into the Federal Employees Retirement System (FERS) to earn benefits upon retirement. The benefit depends on the employee’s age, years of service, and highest three years of pay. Employees are vested in FERS after five years of service. The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees that supplements FERS annuities and Social Security benefits. The TSP is similar to 401(k) plans in the private sector.
FERS participants can choose to voluntarily retire at any day within a month; however, they must keep in mind that their annuity will not begin until the first day of the following month. In addition, federal income tax, state income tax (if applicable), Medicare, and Social Security deductions will be taken from their annuity.
How Do I Start My FERS Retirement Process?
While you’re still working, start saving for retirement. If possible, try to automate your contributions so that you’ll be contributing regularly and consistently. But don’t forget to save for other financial goals, such as paying off credit card debt or building an emergency fund. Talk with your supervisor and/or human resources office as soon as you can to get started on the retirement process. However, you cannot begin the official retirement process more than six months prior to your date of separation for retirement.
Your agency’s personnel and payroll offices are responsible for assembling the documentation necessary to process your FERS retirement case. This can take time. Once your case has been adjudicated, you’ll be able to access and manage your annuity through Services Online. You’ll receive more information about logging in as your case progresses.
Remember that if you retire early, you will sacrifice part of your Social Security benefit, which can impact the amount of money you’ll have available to live on in retirement. For most people, the best option is to wait until your full retirement age, which is 67 if you were born in 1960 or later. Then, you can collect the maximum benefits and minimize taxes. However, there are some reasons to consider retiring earlier, like if you have a health condition that could cause you to have to quit your job sooner than you would otherwise.
Disability Retirement
Disability retirement is available for FERS, CSRS, and CSRS Offset employees who are medically disabled. Medical documentation is required to be submitted with the application. This will include information from your physician, such as your condition’s effect on your life activities on and off work, an explanation of your incapacity, the need for accommodation, and the likelihood of continued incapacitation. If you are applying for disability retirement, you must also apply for Social Security Disability Insurance (SSDI).
