How Does the FERS Minimum Retirement Age Work?
The minimum retirement age, or MRA, for the Federal Employees Retirement System, or FERS, establishes the earliest a federal employee can voluntarily retire from federal service. Once this floor is met, federal employees look at their years of service to determine when they can actually retire.
The table below produced by the US Office of Personnel Management shows federal employees their MRAs based on the years they were born:
|If you were born||Your MRA is|
|In 1948||55 and 2 months|
|In 1949||55 and 4 months|
|In 1950||55 and 6 months|
|In 1951||55 and 8 months|
|In 1952||55 and 10 months|
|In 1965||56 and 2 months|
|In 1966||56 and 4 months|
|In 1967||55 and 6 months|
|In 1968||56 and 8 months|
|In 1969||56 and 10 months|
|In 1970 and after||57|
From the late 1940s to 1970, the MRA crept up steadily from 55 in 1948 to 57 in 1970. By private sector standards, 57 is an early age to retire.
Like other government retirement systems, FERS is generous in this way. These retirement systems reward employees for sticking with public service. They are most generous to employees who start their careers in government and stick with organizations that contribute to the same retirement systems. There is some reciprocity between retirement systems, but employees tend to come out best by sticking with one.
Why Does FERS Need a Minimum Retirement Age?
So why does FERS need an MRA at all?
Simply put, the system’s actuarial soundness would be in peril if the MRA was not in place. Actuarial soundness is important because it ensures the continued operation of the retirement system. Without actuarial soundness, a retirement system eventually runs out of money to pay retirees’ annuities.
When most federal employees ponder retirement, they calculate when they reach retirement eligibility strictly by years of service. Once a federal employee reaches the MRA and 30 years of service, the employee is eligible to retire and therefore access his or her retirement annuity. For employees born in 1970 or later, employees must be 57 years old with 30 years of service.
But what if the MRA did not exist? Let’s look at an example. A person graduates college at 22 years old and immediately begins working for the federal government. At age 52, this employee has 30 years of service; however, he cannot retire for five more years because his MRA is 57.
This example situation is common among government employees. Many begin their public service careers right after college, hang around for a few years, and the big payoff at the end of their careers keeps them in government. The MRA in the example above keeps this employee working and contributing for the retirement system an extra five years.
This is effectively a 10-year swing for the retirement system. It gains more years of contributions and avoids five years of annuity payments. An important caveat here is that only a small portion of government employees retire precisely when they’re eligible, but the MRA for FERS is still important.
It prohibits employees from retiring before they reach a certain age, and that means fewer annuity payments over the long haul.
Without the MRA, FERS would need to increase employee contributions or decrease retiree benefits to continue to operate. The MRA helps the federal government maintain an actuarially sound retirement system that provides benefits promised to retirees when they were employees.