Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Can You Retire at 45?

Flickr user damien_p58

I received an email recently about someone interested in getting fired — but not the way you think:

I have recently caught interest in the FIRE (financial independence/retire early) movement and was wondering if you have ever written any articles or helped any other federal employees plan retirement for this situation. I am in my early 30s and have dreams to retire by age 45 or 50, but most of the guidance out there does not apply to my situation. Other websites cover this topic in detail, but something specific to federal employees would be a great read.

After doing some research on the FIRE concept, I found that retiring very early is a real goal of more than one federal employee. Here are some of the articles I read to learn more about the concept:

According to Rob Berger, a contributor at Forbes and the author of the last of the articles listed above, the goal of extreme early retirement can be achieved by following four steps. But be forewarned: They’re not easy.

Step One: Earn a Lot of Money

You must have a good income in order to be financially independent at such a young age — in the six-figure range, Berger writes. For federal employees, this can be accomplished at the GS-13, Step 6 level and higher, if you’re in the Rest of the U.S. pay scale. In the highest locality pay areas, such as San Francisco, it’s attainable about midway through the GS-12 steps of the pay scale. But if you’re still in the five-figure salary range, don’t despair. This isn’t the most important step.

Step Two: Save (a Lot)

The next step is to save 50 percent of your income. This takes real discipline. Think McDonald’s vs. Ruth's Chris Steak House and biking to work vs. riding in a new Mercedes SUV.  Back-to-basics is the key. I’ve met many frugal federal employees in my 30-plus years in and around government, so I know there are some of you out there for whom this wouldn’t be much of a stretch. But I’m sure there also many people who just stopped stopped reading this column.

Step Three: Max Out Your Retirement Contributions

If you’re among those still reading, this step requires maxing out your retirement savings. If you’re younger than 50, then you’re limited to saving $18,000 per year in your Thrift Savings Plan account. Those under the Federal Employees Retirement System receive an automatic 1 percent of their basic pay contributed by their government employer, along with a dollar-for-dollar matching contribution on the first 3 percent of employee contributions, and 50 cents on the dollar on the fourth and fifth percent.

So, if you earn $100,000 and you contribute 5 percent of your basic pay to your TSP account, by the end of the year, you will receive $5,000 (5 percent of $100,000) in agency automatic and matching contributions, along with up to $18,000 of your own contributions. That’s a total of $23,000 invested for your retirement. In addition, if you haven’t been FIREd by age 50, you can begin to make catch-up contributions to the tune of an additional $6,000 per year. (But there are no agency matching contributions for those funds.)

This doesn’t amount to half of your salary if you are earning more than $50,000 or $60,000. But don’t forget, you’ll need some of your salary to pay your living expenses (as frugal as you may be), and your retirement contributions, taxes and insurance withholding that also are deducted from your biweekly salary.

Step Four: Invest Wisely

Last but not least, the key to retiring early is to invest wisely. According to Berger, this includes using index funds and not hiring a financial adviser. This is definitely possible for federal employees using the TSP, since the C, S, F and I Funds are invested in low-cost index funds and federal employees mostly do it themselves and incur very minimal administrative expenses.

With all of these steps in mind, would it be possible for a federal employee who is covered under FERS to retire younger than the minimum retirement age of 55-57? Yes, but there would be some problems to overcome along the way. We’ll explore those in next week’s column.

Photo: Flickr user damien_p58

Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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