Federal Retirement Planning: Answering Reader Questions
Federal retirement planning can be a complicated business. There are many different variables and rules that apply to each specific situation. Change one or two of the variables and the best solution to the problem will be entirely different. In order to get accurate answers to your retirement questions, they should be clear, and include specific details. The response you receive should be in plain language and include resources for additional information, if available.
I’m a civilian federal employee and I plan to retire under the MRA+10 type of retirement on July 27, 2024. I’ll be retiring at age 59 years and 0 Months with 26 years, 8 months, and 23 days of creditable service, including 1,432 hours of unused sick leave. Although I will be over my FERS minimum retirement age, I know my annuity will be reduced because I will be under age 60 with less than 30 years of creditable service. I’m considering postponing the application for this benefit so that I can receive an unreduced annuity. If I postpone until I’m 60, will I receive a full, unreduced annuity at that time because I would then be 60 years old and have 20 years of creditable service, or must I postpone until I’m 62 to receive an unreduced annuity?
- If you leave federal service with less than 30 years of service after you reach your MRA but before age 60, you can resign and file an application to apply for your retirement a few months before your 60th birthday since you will then have 20+ years of service. This will allow you to avoid the 15% age reduction (5% for every year under age 62). Select the commencing date for your retirement using the guidance provided in the application.
- You can choose to have your Federal Employees Retirement System annuity begin either on the first day of the month following your separation from federal service or on the first day of any month that is at least 31 days after the Office of Personnel Management receives your application—but before your 62nd birthday.
- You will receive your unreduced retirement if you choose as a commencing date the first day of the month after your 60th birthday, since you have over 20 years of service. Don’t wait until you’re 62 to apply! And also consider the benefit of continuing to work to age 60, when you’ll qualify for an immediate, unreduced retirement benefit with a FERS supplement. The supplement is not payable when you postpone your retirement application.
Tandems and Health Benefits
Thank you for your recent article regarding tandem federal employees and mentioning the Foreign Service. I have been reading your columns for years and feel like the Foreign Service (and our unique retirement) is the “Forgotten Service.” One question: I was always told that an employee had to be enrolled in a health plan at the time of retirement to carry that benefit into retirement. Is that still the case, particularly for tandems?
The key word is “covered” by the Federal Employees Health Benefits program for the five years immediately preceding a retirement date. Here’s the official word from OPM:
- Employees are eligible to continue health benefits coverage, upon retirement, if they meet all the following requirements:
- He/she is entitled to retire on an immediate annuity under a retirement system for civilian employees (including retirements under FERS Minimum Retirement Age+10); and
- He/she has been continuously enrolled (or covered as a family member) in any FEHB plan(s) for the five years of service immediately before the date the annuity starts, or for the full period(s) of service since his/her first opportunity to enroll (if less than five years).
For purposes of continuing FEHB coverage into retirement, “service” means time in a position in which an individual was eligible to be enrolled. The individual is not required to have been an enrollee continuously, but the individual must have been continuously covered by an FEHB enrollment.
A Question of Entitlement
My wife and I are both Border Patrol Agents and have been married for almost 18 years. For most of our marriage, my wife has paid for our medical coverage. She is retiring at the end of the year and we’re getting conflicting information about survivor benefits. Does my wife need to select a survivor benefit to continue medical coverage in case of her death? We have one daughter who is 17. Will she be included in the survivor benefit and/or medical until she’s 26 if no benefit is selected?
Since you and your wife will have individual entitlement to FEHB (if you both stay long enough to qualify for an immediate retirement benefit), there is no need to provide a survivor annuity to maintain health benefits. If one spouse loses entitlement when the other spouse who had self and family or self plus one enrollment dies, then the surviving spouse can elect to have coverage through their own retirement or employee benefit. This would be a qualifying life event and the change could be made outside of open season using the SF 2809 Health Benefits Election form.
As long as either you or your spouse are alive, your daughter will be covered until age 26.