Ask The Experts: Retirement

By Reg Jones

Deferred annuity

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Q. I am a federal law enforcement officer under FERS. The minimum retirement age in my field is 50 or 25 years at any time. We collect 1.7 percent per year for the first 20 years. At 10 years, we can apply for a deferred annuity at the MRA.

I am 34 and considering resigning early to pursue opportunities in the private sector. I will have 10 years in service soon. Is there an advantage to waiting until I have 10 years? Assuming I apply at 50 and have accumulated 10 years of service accruing 1.7 percent per year, what sort of penalty could I expect for retiring under age 62?

A. If you leave with 10 years of service, you could apply for a deferred annuity at your minimum retirement age, which would be 57. However, your annuity would be reduced by 5 percent for every year (5/12 percent per month) that you were under age 62. If you had fewer than 10 years, the earliest you could apply for a deferred annuity would be age 62. In either case, your annuity would be based on your service and high-3 on the day you left government and computed using the standard formula: .01 x your high-3 x years and full months of service.

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