One of my coworkers stopped by and started asking me questions about his FERS retirement.
Normally, I welcome these questions. That’s why I created this website. To help guide fellow feds understand all of their crazy retirement benefits.
But I have to admit I was a little bit stumped by his question.
He wanted to retire with 27 years of creditable service at his minimum retirement age and wanted to know if there was a way he could keep FEHB without taking a reduced pension. Or, if he wanted it all, would he need to wait until he had his full 30 years of service.
While you can retire with an immediate retirement at your MRA (which is 57 for most employees), there are are a lot of nuances in how your benefits work with this type of retirement and you will have some important choices to make. Here’s an unofficial guide to help you understand your choices with an MRA+10 retirement.Get Gov Worker’s top 4 tips for federal employees!
Table of Contents
- What does MRA stand for in federal retirement?
- What does MRA + 10 mean?
- How does MRA + 10 retirement work?
- What are the advantages of MRA + 10 retirement?
- What are the disadvantages of MRA + 10 retirement?
- What about that rule where you can draw a unreduced pension at age 60 with 20 years of service?
- FAQ’s about the MRA+10 retirement
Please do not confuse my personal blog for financial advice, tax advice or an official position of the U.S. Government. This post may contain affiliate links. If you make a purchase after clicking on a link, I get a small percentage of the sale at no additional cost to you.
What does MRA stand for in federal retirement?
If you’re brand new to the federal government, you might be wondering what this “MRA” all of the older employees are talking about means. MRA is an acronym for minimum retirement age. If you are a federal employee who is not yet at retirement age, chances are your MRA is age 57.
Reaching your MRA is a special retirement milestone because at that point, you can retire with an immediate retirement (with certain other restrictions described below). Receiving an immediate annuity is important because
- You can keep your FEHB in retirement, paying only the employee portion, for the rest of your life. (I estimate this benefit is worth a half million dollars.)
- You can receive your FERS pension annuity payments immediately.
If you leave before your MRA, it’s considered an early retirement, and you can still draw the portion of your FERS pension you are entitled to in retirement age. This is called a “deferred retirement“.
To make things even more confusing, there’s a 3rd option called postponed retirement that we’ll also cover in this article.
What does MRA + 10 mean?
For the remainder of this section, I’m going to talk about retirement options under the federal employees retirement system (FERS) that you can choose at your MRA. For a full list of retirement scenarios, check out this article.
To receive the full retirement package in the FERS system, you need to
- Reach the FERS minimum retirement age (again, likely age 57 if you are younger than 57 as I write this article)
- have 30 years of creditable service under FERS
If you reach these two requirements (an MRA+30 retirement) you are eligible for an immediate retirement with the following benefits:
- Full FERS annuity
- FEHB for life
- FERS Supplement
- Ability to continue FEGLI into retirement
Pretty sweet. Right?
You can also retire if you have at least 10 years of creditable service and have reached your minimum retirement age. This is called an MRA plus 10 (or MRA+10) retirement. If you choose this option you can get:
- Reduced FERS annuity
- FEHB for life
- Ability to continue FEGLI
As you can see, you get a lot of the benefits of the MRA+30 retirement with some key differences. And if you want to retire with MRA+10 and have an unreduced annuity, there’s a pathway for you but it comes with some key tradeoffs. Let’s look more closely.
How does MRA + 10 retirement work?
If you select an MRA+10 retirement, you may leave federal service any time after your minimum retirement age if you have 10 years of service. If you select this option, you will not be eligible for the FERS Supplemental Pension. Your FERS annuity will also be reduced. However, you will be able to continue FEHB and FEGLI without interruption upon retirement.
How much will your pension be reduced?
In OPM legalese, “the annuity is reduced for each month you are under age 62. The reduction equals five percent per year (or 5/12 of one percent per month)“.
What does that mean? It means that if you retire at age 57, your annuity would be reduced by 25%.
Pretty straightforward… right? Well, there is one wrinkle if you don’t want a reduced annuity, called postponed retirement.
How a postponed retirement works if you retire with MRA + 10
I briefly touched on postponed retirement on my posts about early retirement for federal employees. Postponed retirement is only an option if you are eligible for an MRA plus 10 immediate annuity. It’s different from a deferred retirement, which is where you choose to retire early (before your MRA).
If you are eligible for an MRA + 10 retirement, you can choose to postpone the date at which you draw your annuity. If you have at least 20 years of service, you can begin drawing your annuity at age 60 with no reduction. Otherwise, you can choose to postpone your annuity to age 62 to receive the full amount. When you’re ready to start your annuity payments, you can use form RI 92-19 Application for Deferred or Postponed Retirement, to apply for the postponed retirement benefits.
There are some downsides to the postponed retirement however:
- You cannot continue your FEGLI coverage upon separation. However, you can resume FEGLI coverage once your annuity resumes.
- You cannot continue FEHB coverage. Note that you can extend your FEHB coverage for an additional 18 months with a Continuation of Health Coverage (COBRA), but you have to pay both the government and employee portion of the premium plus an extra 2% administrative charge. You will also be able to resume FEHB once you resume your annuity payments.
What are the advantages of MRA + 10 retirement?
The biggest advantage of the MRA + 10 retirement is that you can leave the federal government and keep your FEHB and FEGLI as soon as you reach your MRA. This would allow you to retire earlier than you otherwise would be able to. (Although you can retire with no reductions at age 60 with at least 20 years of creditable service and age 65 with at least 5 years of credible service).
If you have at least 10 years of service, you can walk away at your MRA and keep some of the most unique and valuable federal retirement benefits.
What are the disadvantages of MRA + 10 retirement?
On the flip side, the biggest disadvantage of the MRA + 10 retirement is that you will face a steep reduction in your pension. And you won’t qualify for the FERS supplement. While it is possible for you to wait and receive an unreduced pension through the postponed retirement provisions, you have to find alternative health insurance until you begin receiving your full pension.
What about that rule where you can draw a unreduced pension at age 60 with 20 years of service?
Everything about the MRA + 10 retirement seems pretty fair to me, except if you have more than 20 years of service.
At 20 years of service, you can take your deferred pension at age 60 (instead of age 62) with no reduction. You can also start your pension at age 60 with a postponed retirement with no reduction. BUT… if you select the MRA plus 10 annuity, you face the same reduction as someone with less than 20 years of service.. For example if you retired at age 57 with 20 years of service, your pension would be reduced by (62-57)*5%, or 25%.
Since you are otherwise entitled to an unreduced pension at age 60, It would seem fair to me that they would reduce your pension 5% for every year you are under age 60, not 62. But it doesn’t work like that.
Whether you have 10 or 29 years of service, you face the same pension reduction with an MRA + 10 retirement.
Going back to the start of the article where I was talking about my colleague. He would have almost 30 years of service at age 57. However, he’d still face a 25% reduction in his pension benefits.
It’s another case where working just a little bit longer can have a huge benefit in your lifetime retirement income.
FAQ’s about the MRA+10 retirement
Am I eligible to retire with only ten years service?
As a FERS employee, if you have reached your MRA and have at least 10 years of federal service, then you are eligible to retire. However, your FERS annuity will be reduced.
Can I keep my FEHB with an MRA + 10 retirement?
Yes- assuming you take the reduced annuity, you can retire with an immediate annuity and receive FEHB benefits in retirement with an MRA+10 retirement.
Can I retire at MRA + 10 without a reduced pension?
You can avoid a reduction in your annuity by taking a postponed FERS annuity. (See section on postponed annuities). To avoid the reduction in your annuity, you will need to give up your FEHB until you reach age 60 (with 20 years or service) or age 62 if you have less than 20 years of credible service.
Do I Get the FERS Supplement with a MRA+10 Retirement?
No. If you choose an MRA + 10 retirement, you are not eligible for the FERS supplement at all.
Can I keep my FEGLI (life insurance) with a MRA+10 Retirement?
Yes. You are eligible to continue both FEHB and FEGLI without interruption if you have at least ten years of service and retire at your after your MRA.
SamSam i.e. "Gov Worker" started working for the government at age 18 and loved it so much that he never left. He started GovernmentWorkerFI in 2019 to help fellow federal employees understand their benefits, take control of their finances, and live their best lives.
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