24 Feb Why turning age 62 is magic for federal employees?
Good things are happening for federal employees about to turn age 62, however most people stop looking forward to birthdays after they first become eligible to drive, or vote but not federal employees.
Ask most people what was the best year in their life, their favorite time, when they were at their best and it is usually younger rather than older. However, federal employees look forward to age 62.
If you are under the Federal Employee Retirement System (FERS) program you probably know FERS replaced the old Civil Service Retirement System (CSRS) in the 1980s. Although there still are a few CSRS employees around, in most agencies they’re as rare as a snow storm in Hawaii.
When turning 62 is a great feat for Federal Employees
Turning 62 for a federal employee is a wonderful pinnacle moment in a federal career. A federal employee with at least 20 years of service who reaches age 62 receives a 10% increase to their annuity.
For example, if a federal employee is age 61 and their FERS annuity is estimated to be $40,000 per year, when they turn age 62 their estimated annuity automatically becomes $44,000. The federal government is giving you the best birthday gift ever. You get a 10% boost to your retirement income every year for the remainder of your retirement.
Many employees who retire early are unaware of this benefit and unaware that they are leaving this large sum of money behind.
Federal employees have mandatory contributions deducted from their payroll from the first date of hire. Federal employees are partially paying for their retirement annuity. Working a 20-year career and leaving at age 60, you are leaving a large chunk of your annuity behind because you did not work another two years to age 62.
So why does the government do this?
In the example above, the federal government did not have to pay out the Social Security supplement to the federal employee because they retired at age 60. The supplement would be paid from age 60 to 62.
The 10% increase to the annuity at age 62 is a financial incentive for employees to work up to age 62.