Everyone occasionally dreams of an early retirement, but most of us know that we will be working until at least age 60 or beyond. Some of us even believe we will never be able to stop working. But for federal employees, the timeline sometimes looks a bit different from the norm.
Your Social Security eligibility still begins at the same time as everyone else; at some point between age 65 and 67, depending upon your year of birth, you will reach full retirement age. Of course, you can still retire earlier, at age 62, and draw a reduced benefit check for life. Or, you can wait beyond full retirement age, and early a larger monthly check. But the bottom line is that the rules pertaining to Social Security are the same for you as they are for everyone else.
However, as a federal employee you do have one distinct advantage. If you separate from your service in the year you turn 55, you can begin taking payments from your Thrift Savings Plan without incurring a 10 percent penalty on your income taxes. Most other American workers can’t take early withdrawals from tax-advantaged retirement plans before age 59 ½, meaning FERS gives you a distinct advantage toward an early retirement. However, taking TSP withdrawals at age 55 is usually a one-time distribution that can severely limit your liquidity options, so you should seek expert advice before making that decision.
Of course, in many cases, taking your benefits before age 62 could mean that your monthly checks are permanently reduced. Therefore, an earlier retirement may be possible for you, but it’s an issue to carefully consider along with your financial advisor.
If you do decide to retire early, remember that Medicare eligibility does not begin until age 65. You will be able to use your retiree health benefits, but you should carefully review the plan and estimate your out-of-pocket expenses before deciding to retire. An earlier retirement is certainly possible for some federal employees, but careful planning will help you to avoid unpleasant surprises.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
