Exploring the FERS 10% Bonus
Considering the possibility of extending your career beyond your Minimum Retirement Age (MRA)? Exploring the FERS 10% Bonus at age 62 could provide valuable insights. Here’s what you should keep in mind:
Understanding the FERS 10% Bonus at Age 62
Imagine this scenario: You become eligible for an immediate pension at 60, having completed 20 years of service. Upon retirement, your FERS annuity is calculated using the standard 1% formula. However, when you reach 62, your annuity is recalculated using the 1.1% formula, resulting in a notable 10% increase in your FERS pension, lasting throughout your retirement.
Additional Benefits of Retiring at Age 62
Extending your career brings several advantages:
Accumulating more years of service leads to a higher pension. Wage increases during extended service raise your High-3 salary, boosting your pension. Continued full-salary employment allows for additional contributions to your Thrift Savings Plan (TSP), enhanced by Catch-Up Contributions and agency matches. Accumulation of Unused Sick Leave and Annual Leave during extended service improves your pension and results in a larger lump-sum payment upon separation from service. Moreover, reaching age 62 marks the beginning of Cost Of Living Adjustments (COLAs) for FERS retirees, adding to financial security in retirement.
Building a Stronger Retirement Fund for a Lengthy Retirement
According to the Social Security Administration, one in four individuals who reach age 65 today will live to 90. Considering the potential for a prolonged retirement, ensuring financial stability is crucial. By extending your employment beyond MRA, you can build a larger annuity and strengthen your TSP nest egg, bolstering your financial position for the long term.
Seeking guidance from an FRC® trained advisor with expertise in federal benefits empowers you to navigate the complexities of the FERS 10% Bonus. Together, you can evaluate its impact on your retirement plans, safeguarding against financial uncertainties during your golden years.
