When Considering Retirement

Many significant retirement-related decisions are triggered by an individual reaching a certain age. Below are the different age groups when those decisions go into effect:

Age 50 - Begin making catch-up contributions to the Thrift Savings Plan (TSP). The IRS sets the annual contribution limits, which can change. In 2021, the catch-up contribution limit, available to TSP participants, age 50-plus, is $6,500. Check your Social Security statement each year for accuracy and to track your estimated Social Security benefit and, if applicable, estimate your FERS annuity supplement.

Age 55 - Under CSRS, you are eligible to retire if you have 30 years or more of service. Note that accumulated sick leave does not count toward the 30 years needed for eligibility to retire. Instead, accumulated sick leave counts only toward years of service used in computing the dollar amount of your retirement annuity.

Age 55-57 (MRA) - Under FERS, you are eligible to retire if you have 30 years or more of service. MRA is Minimum Retirement Age, and it depends on your year of birth. Note that accumulated sick leave does not count toward the 30 years needed for eligibility to retire. Instead, accumulated sick leave counts only toward years of service used in computing the dollar amount of your retirement annuity. You are eligible for a special annuity supplement if you retire at MRA or older with 30 years or more of creditable service. The special annuity supplement is subject to earnings offsets if you have wage or self-employment earnings that exceed an annual amount set by Social Security. In 2021, the amount is $18,960. For every $2 earned over that amount, the special annuity supplement is reduced by $1 the following year. The supplement ends when you reach age 62. You are also eligible to withdraw from your Thrift Savings Plan after age 55, when you retire, with no penalty.

Age 59.5 - At this age, there are no more tax penalties for early withdrawals from the TSP. (Withdrawals will be taxed as regular income, but no 10 percent early withdrawal penalty will be levied.)

Age 60 - You are eligible to retire if you have 20 years or more of service, under CSRS or FERS. Note that accumulated sick leave does not count toward the 20 years needed for eligibility to retire. Instead, accumulated sick leave counts only toward years of service used in computing the dollar amount of your retirement annuity.

Age 62 - You are eligible to retire if you have five years or more of service, under CSRS or FERS. Note that accumulated sick leave does not count toward the five years needed for eligibility to retire. Instead, accumulated sick leave counts only toward years of service used in computing the dollar amount of your retirement annuity.

Under FERS, annuity calculation is increased to 1.1 percent per year of creditable service if you are separated at age 62 or older with 20 years or more of service.

This is the earliest age to begin collecting early Social Security retirement benefits. Early Social Security benefits are subject to earnings offsets, up until your full Social Security Retirement age, if you have wage or self-employment earnings that exceed an annual amount set by Social Security. In 2021, the amount is $18,960. For every $2 earned over that amount, your Social Security benefit is reduced $1. The offset no longer applies after you reach full Social Security retirement age.

Age 65 - You are eligible for Medicare. Sign up for Medicare beginning three months prior to your 65th birthday.

Ages 65-67 - You are eligible for full Social Security, depending on year of birth. Full Social Security Retirement Age is also called “full retirement age” or “normal retirement age.”

Age 72 - Begin taking required withdrawals from your Thrift Savings Plan account or be subject to penalties.

Hope this information helps when you are getting close to retirement. Any questions on retirement call our Retiree Chairman at the branch (631-789-1616).

Be safe and keep smiling.