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Federal Retirement
Will You Be Penalized for Retiring Early as a Federal Employee

With the freedom retirement brings, many of us look for ways to retire earlier. Others retire early due to a change in circumstances.

As a federal employee, early retirement may be available depending on your age and years of service.

Contact the Federal Employment Law Firm of Aaron D. Wersing PLLC to discuss retiring early from federal service. Our firm focuses exclusively on issues related to federal employment, so you can rely on our experience to guide you as you consider or plan for early retirement.

What Are Your Retirement Options?

The Federal Employees Retirement System (FERS) covers federal employees who started working for the government on or after January 1, 1987. Under FERS, you have several retirement options, including:

  • Voluntary,
  • Early,
  • Disability,
  • Deferred, and
  • Phased.

Your eligibility depends on your years of service and whether you have met the minimum retirement age (MRA). 

Minimum Retirement Age

Your MRA depends on what year you were born: 

  • Individuals born in 1948 or earlier have an MRA of 55;
  • The MRA increases by two months per year until 1953; 
  • Individuals born between 1953 and 1964 have an MRA of 56;
  • The MRA increases by two months per year through 1969; and
  • Individuals born in 1970 or later have an MRA of 57.

When you retire at your MRA, you typically forfeit part of your benefits.

Voluntary Retirement

You can voluntarily retire when you meet the requirements of the table below:

Minimum AgeMinimum Years of Service
MRA30 (without penalty)
MRA10 (with penalty)

You can also voluntarily retire under special provisions for military personnel, emergency services, or air traffic controllers at any age with 25 years of service or age 50 with 20 years of service.

Early Retirement

You can receive early retirement if a significant percentage of your agency’s employees will be separated or have their pay reduced because your agency is undergoing a:

  • Major reorganization,
  • Reduction in force, or
  • Transfer in function. 

Your agency head must also request the U.S. Office of Personnel Management (OPM) issue a Voluntary Early Retirement Authority (VERA).

You can qualify for early retirement at any age with 25 years of service or age 50 with 20 years of service. Otherwise, you typically qualify when you reach age 62.

Disability Retirement

You can qualify for disability retirement if:

  • You have worked in a FERS-covered position for at least 18 months;
  • You became disabled because of a disease or injury;
  • Your disability lasts one year or longer;
  • You are unable to continue performing your current position usefully and efficiently because of the disability;
  • Your agency cannot accommodate your disability;
  • No other positions at the same grade or pay level are available;
  • You apply within one year of your separation from service; and
  • You also apply for Social Security benefits.

You can apply at any age, but if you are under 60, your benefits can stop if you medically recover or return to work.

Deferred Retirement

Former federal employees can qualify for deferred retirement if they:

  • Are not eligible for immediate benefits,
  • Meet minimum service requirements, and
  • Do not take a retirement deduction refund.

You can meet the service requirements if you arrive at your MRA and have ten years of service or turn 62 with five years of service.

Phased Retirement

Under phased retirement, you work part-time and receive partial benefits over several months to years. Phased retirement can be an effective option for many who want to space out the retirement process.

Are There Penalties for Retiring Early?

Depending on the type of retirement, your benefits may be reduced if you retire before age 62.  Specifically, if you take voluntary retirement at your MRA with ten years of service, your annuity is reduced by 5% each year you are under 62. If you take deferred retirement based on reaching your MRA and having ten years of service, your annuity is reduced by 5% for each year and 5/12 of 1 % for each month under age 62.

Can You Avoid the Early Retirement Withdrawal Penalty?

If you voluntarily retire early, you can postpone receiving benefits to reduce or avoid the penalty. If you postpone:

  • Your life insurance will not continue between when you retire and when your annuity begins;
  • Your health insurance can continue for up to 18 months following your retirement date; 
  • You can continue or apply for long-term care coverage; and
  • You will not receive any cost of living adjustments until your annuity commences.

The closer to age 62 you start receiving benefits, the smaller the penalty.

Speak with a Federal Employment Attorney

If you are a federal employee, early retirement can be a great option. Contact the Federal Employment Law Firm of Aaron D. Wersing PLLC today to discuss whether early retirement may work for you and help you start planning.

Author Photo

Aaron Wersing, Attorney at Law

Aaron Wersing is the founder of the Law Office of Aaron D. Wersing. Mr. Wersing graduated from the Georgia State University College of Law with a Doctorate in Jurisprudence and was the recipient of the CALI Excellence for the Future Award. Mr. Wersing previously attended the University of Georgia, where he received a Bachelor of Business Administration degree in Accounting. Mr. Wersing is an active member of his local community. Mr. Wersing acts as a volunteer attorney with Houston Volunteer Lawyers, the pro bono legal aid organization of the Houston Bar Association. He is also a member of professional legal organizations such as the National Employment Lawyers Association and the American Inns of Court. To reach Aaron for a consultation, please call him at (833) 833-3529.

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