Retirement from federal government service works differently than private-sector retirement, and the rules trip up even seasoned employees. The Federal Employees Retirement System (FERS) covers most workers hired since 1987, and it bundles three income sources: a pension, Social Security, and the Thrift Savings Plan. Miss one piece and your monthly income projection can be off by hundreds of dollars.
The bigger problem is timing. Eligibility hinges on your age and years of creditable service, and the rules shift depending on whether you take an early out, a deferred retirement, or a full immediate annuity. Many employees leave before verifying their service computation date and lose credit they earned.
This guide breaks down the eligibility math, the TSP withdrawal rules, the FEHB health benefit carryover, and the paperwork deadlines. Each section gives you a concrete step you can take today.
The Three Income Streams Behind Your Federal Pension
Your federal pension is not a single payment — it is a formula tied to your "high-3" average salary and your length of service. FERS uses 1% of your high-3 for each year served, or 1.1% if you retire at 62 or older with at least 20 years.
That small decimal difference matters: on a $90,000 high-3, the 1.1% multiplier adds thousands per year over a 25-year career.
Social Security is the second leg. Most FERS employees pay into it, unlike the older CSRS system. The third leg is the Thrift Savings Plan, a defined-contribution account with a government match of up to 5%.
The Thrift Savings Plan publishes current contribution limits and withdrawal options each year. One practical move: log into your TSP account and confirm your fund allocation and beneficiary designations before your retirement date, since changes after separation follow different rules.
How the High-3 Calculation Actually Works
The high-3 is your highest three consecutive years of basic pay, not your final three years. A promotion or grade increase in your last few years can lift the average meaningfully. Request your personnel file to verify every pay change is recorded.
Eligibility Rules That Decide When You Can Retire
The minimum retirement age (MRA) under FERS falls between 55 and 57, depending on your birth year. Immediate retirement typically requires MRA plus 30 years of service, or age 60 with 20 years, or age 62 with 5 years.
Deferred retirement is the trap. If you leave before meeting an age-and-service combination, you keep the pension but lose FEHB health coverage in retirement and receive no cost-of-living adjustments until the annuity starts. A deferred annuity at 62 with 5 years of service pays far less than an immediate one.
The Office of Personnel Management maintains the official eligibility charts by birth year. In one case, an employee with 28 years of service assumed she qualified at her MRA — she was short of the 30-year threshold and had to buy back military time to close the gap.
How to apply this: pull your Service Computation Date from your SF-50 and match it against OPM's MRA chart before you set a target date.
FEHB and FEGLI: The Benefits You Keep or Lose
Your Federal Employees Health Benefits (FEHB) coverage carries into retirement only if you were enrolled for the five consecutive years immediately before retiring (or since your first opportunity to enroll). Break that chain and you lose the government's premium contribution for life.
The same five-year rule applies to FEGLI life insurance, though the coverage shrinks after retirement unless you convert it. A common scenario involves an employee who drops FEHB for a spouse's plan in year four before retirement and then cannot re-enroll.
OPM's FEHB retirement page explains the five-year test in detail. One action step: check your enrollment history in Employee Express and document every continuous year of coverage.
What Happens to Your FSA and Other Accounts
Flexible spending accounts end at separation. Unused funds generally do not roll over, so schedule eligible medical expenses before your final pay period.
TSP Withdrawals: Where Most Retirees Lose Money
How you withdraw from the TSP affects both taxes and longevity. The TSP offers traditional and Roth balances, with required minimum distributions beginning at 73 under current law. Your options include a lump sum, monthly payments, an annuity, or a mix.
The IRS explains that RMDs are calculated from your prior year-end balance and life expectancy tables. Skipping an RMD triggers a penalty. The TSP withdrawal guide lays out the specific forms, including the full withdrawal options and rollover mechanics.
A table makes the tradeoffs clearer:
| Withdrawal option | Best for | Main risk | Action to take |
|---|---|---|---|
| Lump sum | Small balances or rollover to an IRA | Large tax hit in one year | Compare Roth and traditional tax brackets |
| Monthly payments | Steady income | Overspending the balance | Set a sustainable rate |
| Life annuity | Guaranteed income | Inflation erosion | Review survivor options |
| Rollover to IRA | More fund choices | Losing TSP low fees | Model total cost first |
How to apply this: log into your TSP account and review the withdrawal calculator before you attend your agency's retirement briefing.
The Paperwork Timeline That Saves You Months
The retirement application usually goes to your agency's HR office at least 30 to 90 days before your target date. Waiting until the last minute delays your first annuity payment, and interim payments often arrive with errors.
The OPM retirement application page lists the required forms, including the SF 3107 for FERS employees. One common issue is an incomplete spousal consent form for survivor benefits, which halts processing.
How to apply this: request a benefits estimate from HR and submit the application packet at least 90 days out, keeping copies of every form you sign.
Frequently Asked Questions About retirement from federal government
How does a deferred annuity work if I leave before my MRA?
You can receive a deferred annuity if you have at least 5 years of creditable service, but payments generally begin at your MRA or age 62 depending on your years. The catch is that you lose FEHB eligibility and cost-of-living adjustments until payments start. A common scenario is an employee leaving at 48 with 12 years and claiming at 62.
Confirm your service total before deciding on retirement from federal government.
Can I keep FEHB if I retire with a deferred annuity?
No, typically not. Deferred retirees generally cannot carry FEHB into retirement even if they met the five-year enrollment rule, because the benefit requires an immediate annuity. An exception exists for disability retirements. If health coverage is critical, plan to reach immediate eligibility for your retirement from federal government.
What happens to my unused sick leave at retirement?
Unused sick leave is added to your length of service for annuity calculation purposes under FERS, though it does not count toward eligibility. For example, 2,000 hours converts to roughly a year of service credit. Verify your balance with HR before filing. Your retirement from federal government package should reflect every credited hour.
What is the special retirement supplement, and who gets it?
The FERS annuity supplement adds an estimated Social Security benefit for employees who retire at their MRA with at least 30 years, until age 62. It phases out based on earnings. Law enforcement and air traffic controllers follow different rules. Check your eligibility before your retirement from federal government date.
Are federal pensions subject to the Windfall Elimination Provision?
Yes, in some cases. The WEP can reduce Social Security benefits if you also receive a pension from work not covered by Social Security. Many FERS employees are unaffected because they pay Social Security taxes, but CSRS employees often are. Request a Social Security statement to evaluate your retirement from federal government income.
Final Takeaways and Your First Move
Federal retirement rewards preparation more than salary:
- FERS pays 1% to 1.1% of your high-3 per year served — the multiplier changes everything.
- The five-year FEHB rule decides whether you keep health coverage for life.
- TSP withdrawal choices drive both your tax bill and income longevity.
- Filing 90 days early prevents payment delays and processing errors.
Your next step: request a formal benefits estimate from your agency HR office, then cross-check every figure against your SF-50 and OPM's official charts. Treat retirement from federal government as a checklist, not a single decision.
