For many federal employees, retirement becomes the focus years before it actually happens. They count down the months until they reach their Minimum Retirement Age, hit 20 or 30 years of service, or qualify for an immediate pension.
Reaching that milestone is exciting, but it also raises an important question.
Is the first day you’re eligible to retire really the best day to retire?
The answer depends on far more than your retirement eligibility.
Under FERS, your age and years of service determine when you can retire. They don’t necessarily determine when you should.
For some employees, retiring at the first opportunity is exactly the right choice. For others, staying on the job just a little longer can meaningfully improve their financial outlook for decades.
Working another year doesn’t simply add another year of salary. It can increase your pension by adding another year of creditable service, raise your High-3 average salary if your highest earning years are still ahead, allow your TSP to continue growing with additional contributions and agency matching, and potentially increase your future Social Security benefit. Even delaying retirement by a few months can sometimes improve your overall retirement picture.
Of course, retirement isn’t just a financial decision.
Health concerns, family responsibilities, job satisfaction, and the desire to enjoy retirement while you’re still active are all valid reasons to leave the workforce when you first become eligible. There isn’t a universal “right” retirement date.
The key is understanding the tradeoffs.
Instead of asking, “Am I eligible to retire?” consider asking a different question: “What do I gain—and what do I give up—by retiring now instead of next year?”
That’s often where the biggest planning opportunities are found.
Many federal employees discover that seeing how their pension, TSP, Social Security, FEHB, and other benefits work together gives them a very different perspective on their retirement timeline.
A Federal Retirement Consultant (FRC®) can help you evaluate the financial impact of retiring this year versus waiting longer, so you can make an informed decision based on your goals rather than the calendar.
