Deferred annuity versus early retirement penalties

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If I complete 5 yrs of creditable service & buy back 12 years of mil time, what is my annuity if I defer collecting it versus if I take it right away starting at age 45? I think I take a 5% hit for every year of service I lack before my minimum retirement age (59). So if I retire at 45, 14 yrs early, I’d take a 70% hit. True? What if I defer collection until 62, do I still take the hit?

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Posted by (Questions: 1, Answers: 0)
Asked on September 14, 2018 1:58 pm


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James, in the above scenario, 5 years of creditable civilian service means you are vested in FERS and making the military deposit for 12 years of military service adds to that 5 years. So, when you do collect, your retirement will be based on 17 years of creditable service or 17% x high-3 average salary. At the age of 45 you are not eligible to collect a voluntary or deferred pension under FERS. If you resign at age 45 and do not take a refund of your retirement contributions, your only option would be to defer your pension to a later date with the earliest available date being your Minimum Retirement Age (MRA) thru age 62. If you take this deferred pension prior to age 62, it will be reduced 5% for every full year you are under age 62. You will not receive credit for your unused sick leave and you will not be eligible to pick up the FEHB nor the FEGLI when the annuity commences. The way I like to tell individuals about deferred retirement is you will receive money in the future for work in the past. In any event, the money you receive in the future will far exceed what you have paid into the retirement fund and should you change your mind and decide to return to federal service, you will pick up where you left off and not have to redeposit that money.

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Posted by (Questions: 0, Answers: 589)
Answered on September 14, 2018 2:47 pm