Talk to anyone in their 40s or 50s, and most of them will paint a similar picture: They can’t wait to retire, but they’re simultaneously worry that it will never be possible. That’s a common fear, but the picture looks a little different for federal employees. If things line up just right, you might be able to retire earlier than average.
That’s because your retirement plan is based on three separate benefits, with each of them offering varying benefits as well as limitations. Social Security, for example, works the same for all of us. Your full retirement age is set somewhere between 65 and 67, depending upon when you were born. That’s the age at which you can draw your full scheduled benefits. Like everyone else, you could also take your benefits as early as age 62, if you don’t mind a smaller payment, or you could wait up to age 70 and receive larger monthly checks.
But since you have two other retirement benefits from which to draw, you might have more options than the average person. For example, you can begin taking distributions from your Thrift Savings Plan as early as the year you turn 55, if you decide to separate from service at that point. (Similar tax-advantage retirement plans for the private sector require enrollees to turn age 59 ½ before taking payments.) And of course, you have your FERS basic benefit, which functions as a pension based upon your years of service and average salary.
So, if your FERS basic benefit and TSP can provide enough income, you could conceivably retire before you’re eligible for Social Security. Keep in mind, though, that most people are living twenty years or more in retirement these days. You want to feel very confident that your Thrift Savings Plan withdrawals will last for a while. Social Security and your FERS basic benefit, of course, last for life.
If you’re considering an early retirement, give us a call. We can help you run the numbers, anticipate future expenses, and decide if this is a feasible plan for you.