Quick Decision

You want to keep your options open because you expect (or want) to leave your Federal job before you are eligible to retire

• If you leave your Federal job before you are eligible to retire under FERS
• If you leave your Federal job before you are eligible to retire under CSRS

If you leave your Federal job before you are eligible to retire under FERS

FERS is flexible for a work force that is more likely to work for several different employers over the course of a career. It allows for the fact that many employees may not retire from the Federal Government. FERS builds on the Social Security credits that employees already have or may earn in the future from non-Federal work. Also, the Thrift Savings Plan (TSP) keeps its value after an employee leaves Federal service.

One real advantage to FERS is that you do not have to stay with the Federal Government until retirement to receive good value from your retirement plan. This value comes from the fact you get an Agency Automatic contribution to your Thrift Savings Plan (TSP) account equal to 1% of your salary. Plus, if you contribute to the TSP, you can get up to 4% more. In addition, you will probably earn more Social Security credits wherever you work next. If you leave the Government long before retirement, with little service, FERS will always be best.

Let's say that you leave before you have the right combination of age and service to retire. Once you reach the age shown in the chart listed below, you may elect to begin receiving benefits. If you don't have 30 years of service, you may also choose to put off receiving benefits until as late as age 62. This will allow you to receive a bigger benefit by avoiding part or all of the 5% per year reduction, and you can collect on your Social Security and your TSP benefits.

If you don't want to wait until retirement age, you can withdraw all of the money you have contributed toward the FERS Basic Benefit Plan. It will be paid to you with a market rate of interest; that is, the same rate of interest earned by the U.S. Treasury securities purchased by the Retirement Fund (the account that contains all employee and employer contributions to CSRS and FERS). However, you give up your right to your Basic Benefit after retirement. If you take your money out, you cannot put it back in if you return to work with the Federal Government later. It's usually better to leave your money in FERS so that you can receive monthly benefits when you retire. This is because you pay very little compared to the benefits you will eventually receive from the Basic Benefit.

Under FERS, you can retire when your age and years of Federal service match any of the retirement combinations shown below. These are all immediate annuity benefits that also allow you to keep your Federal Employees Health Benefits (FEHB) and Federal Employees' Group Life Insurance (FEGLI) coverages as a retiree if you have been enrolled for enough time (usually the 5 years immediately preceding your retirement) before you retire.

The following chart will help you determine what your MRA is.

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If you leave your Federal job before you are eligible to retire under CSRS

CSRS does not provide good benefits to employees who leave the Federal Government before they are eligible to retire.

The earliest you can begin receiving monthly retirement checks is at age 62. It doesn't matter how many years of Federal service you have. While you're waiting to become eligible for your benefit, the buying power of your retirement dollars goes down because of inflation. You don't receive cost-of-living adjustments until your benefits begin. Also, the monthly checks you receive will be smaller than if you had stayed in Federal service. Your annuity is calculated according to the pay and service you had when you left Federal service.

For example, let's say you simply stop working for the Federal Government at age 53 with 30 years of service. You're not 55 yet, so you don't qualify for retirement. Your monthly checks from CSRS won't start until you turn 62. Your monthly benefit amount is based on your pay when you leave. With inflation, those dollars don't buy as much by the time you receive them at age 62. You can't continue your health or life insurance as a retiree, either.

Unless you are a CSRS Offset person, under CSRS, you do not have Social Security coverage. This means that if you leave the Federal Government before retirement, you have not been earning credits under Social Security. If you get a new job in the private sector, you and your family may not have any benefit if you become disabled or die until you have worked long enough to have earned these benefits.

Exceptions: There are several cases where switching to FERS and not being able to "lock up" your Social Security benefit are not a problem. One is that you're not interested in earning a Social Security benefit because you want to avoid having your spousal Social Security benefit reduced by the Public Pension Offset.

In addition, if your reason for transferring to FERS is to take advantage of its more flexible rules about when you can receive your benefits, then eligibility for Social Security benefits may not be a concern to you. For example, if you work in an agency that is downsizing, FERS more flexible rules may be very important to you.

In general, the Civil Service Retirement System is a good retirement plan for employees who know that they will stay with the Federal Government until they are eligible to retire and who retire young. It is not very well-suited to employees who may not spend their entire careers in Federal service, particularly if they leave before retirement.

To read more about this:

• Thrift Savings Plan under FERS
• Minimum Retirement Age