Life After Government: When to Retire

After more than 20 years of working in the government, there's one date inevitably circled with thick red pen on any federal employee's calendar: the day you become eligible to retire.

Eligibility is determined by your age and how long you've worked in the government. If you're in the Civil Service Retirement System, you must be either 62 years old with at least five years of service, 60 years old with at least 20 years of service, or 55 years old with at least 30 years of service.

Under the newer Federal Employees Retirement System, you must be either 62 years old with five years of service, or 60 years old with at least 20 years of service. For FERS employees with at least 30 years of experience, anyone born before 1948 can retire at age 55; the age gradually increases to 57 for those born later.

Feasibility

Eligibility to retire and the feasibility of actually leaving the federal workforce are hardly the same thing, however. According to Tammy Flanagan, senior benefits director at the National Institute of Transition Planning Inc., which contracts with a number of agencies to conduct retirement seminars, for CSRS employees, "once you get your 30 years in, you've got a pretty nice retirement." If you work another five or 10 years, you're replacing your full salary or more if you have invested in the Thrift Savings Plan along the way--even without Social Security, which CSRS employees are ineligible to receive.

For FERS employees, there is "a break point," Flanagan said. If you're eligible for retirement but younger than 62, you will be too young to collect Social Security, which the FERS system relies on heavily. To make up for that, the government provides a supplement. However, the supplement only reflects the years you worked in the government, not years you may have spent working in the private sector. So if you're considering retirement at age 61, it might pay to wait an extra year and take in a Social Security income that reflects a full lifetime of work.

The Date

Choosing the right date to retire takes careful planning in order to maximize retirement benefits. Flanagan lists a number of considerations to weigh in selecting your date. Consider:

• Leaving at the end of a month. Retirement benefits start on the first day of the month following your retirement. This way, you won't have a gap between receiving your last paycheck and your first annuity.
• Leaving at the end of the year. Employees can carry over 240 hours of annual leave into the new year. So accumulate as many leave days as you can this year and add it to the 240 hours you carried over. By the end of the year, you could have more than 400 accrued hours, which could cash out into a lump sum of $25,000. You would receive that payment in about a month's time, serving as a transition allowance until the government begins paying your full annuity, since your initial checks might not be the entire amount you have earned. Many times, it takes the Office of Personnel Management a number of months to compute your annuity payment; until then employees receive an estimated annuity, which often amounts to around 80 percent of the full benefit.
• Waiting until January. Working into the new year gives you one more pay raise to boost your life insurance total, which is computed based on your highest salary. It gives you one last time to put money into a Flexible Spending Account, which keeps money tax-free for health and child-care purposes. You can stock up on contact lenses or get that root canal you need. It also gives you another shot to invest in the Thrift Savings Plan, if you maxed out your possible contributions from the year before. Some employees may choose to put their entire first months' paychecks into the TSP, because once you retire, you can no longer contribute.
• Waiting until you can carry over your health insurance. You must be enrolled in the government's health insurance program for at least five years before you're allowed to bring it with you-for you and your spouse-into retirement. The government's health benefits can potentially save you thousands of dollars in your retirement.

• CSRS: Jan. 3, 2006
• FERS: Dec. 31, 2005