Cameron Bryant, of Found Revenue Solutions and Retirement Specialist at Federal Employee Advocates, has released an in-depth educational overview explaining the true financial implications of early retirement for federal employees under the Federal Employees Retirement System (FERS).
According to Bryant, while many public sector employees begin exploring early retirement options in their mid-50s, the tradeoffs can be substantial.
“Early retirement sounds like a dream—more time and less stress—but in many cases, it leads to a reduced lifestyle unless you have other income sources or significant savings,” Bryant explains. “FERS was created to reward long-term service, and leaving early disrupts that equation.”
Understanding the Mechanics of MRA+10
Under the MRA+10 provision, federal employees can retire after reaching their Minimum Retirement Age (MRA) with at least 10 years of creditable service. In 2025, the MRA ranges from 55 to 57 depending on the year of birth. However, retirees face a 5% permanent reduction for every year before age 62, lose access to the FERS Special Retirement Supplement, and may have to postpone receiving their annuity to minimize penalties.
Bryant notes that while postponing the annuity can reduce the financial hit, it also means giving up immediate income—making it critical to plan ahead.
The Role of VERA: Not Always in Your Control
The Voluntary Early Retirement Authority (VERA) provides another path for early exit, typically during agency downsizing or restructuring. Employees may retire as early as age 50 with 20 years of service or at any age with 25 years—and the usual 5% reduction is waived. However, Bryant cautions that this option isn’t under the employee’s control: it must be offered by the agency based on workforce needs.
Impact on FERS Annuity and Benefits
Retiring early directly affects how the FERS basic annuity is calculated.
- 1% of High-3 x years of service applies under MRA+10 or early retirement.
- 1.1% of High-3 x years of service applies if retiring at 62 or later with at least 20 years of service.
By leaving early, retirees miss both the higher multiplier and additional years of service—reducing lifetime income by tens of thousands of dollars.
Another major consequence involves Federal Employees Health Benefits (FEHB). To retain FEHB in retirement, employees must be eligible for an immediate annuity and have been enrolled for five consecutive years before retiring. Those who postpone their annuity to avoid the penalty lose FEHB coverage until payments begin—and in some cases, permanently.
Social Security and TSP Considerations
Retiring at 57 leaves a five-year gap before Social Security eligibility at age 62. Without the FERS Supplement (unless under VERA), retirees must fund this gap using savings or Thrift Savings Plan (TSP) withdrawals—potentially triggering 10% early withdrawal penalties before age 59½.
“Accessing your TSP early requires strategic planning,” Bryant emphasizes. “Missteps here can create tax penalties and income shortfalls right when you’re transitioning into retirement.”
Healthcare Costs and Lifestyle Tradeoffs
Without FEHB, private health insurance can cost several hundred dollars per month until Medicare eligibility at age 65. Bryant explains that while early retirement brings freedom and relief from job stress, it also introduces long-term financial risk:
- Reduced lifetime pension income
- Higher healthcare costs
- Potential loss of FEHB coverage
- Early withdrawal penalties from TSP
- Income gaps before Social Security
“Delaying retirement just a few more years often results in a significantly stronger financial foundation,” Bryant advises. “If leaving early is non-negotiable, your financial strategy must be airtight.”
About Cameron Bryant
Cameron has over 33 years experience in working with Business Owners, Seniors, Federal employees and Franchisee’s in the planning and development of Tax Favored Retirement plans, Living Trusts, Buy/Sell Agreements, Executive Bonus Plans Marketing and Wellness Benefit programs. I was able to work exclusively with the Franchisee’s of 7-11, Mobil, Shell, Hallmark, and Yamaha to create personal as well as business Retirement Plans. Working now exclusively with Federal Employees and retirees in helping them understand their benefits and helping them to retire with a sound and stable plan.
Learn More: https://federalemployeeadvocates.com/Cameron/
949-412-3534
Cameron@ FederalEmployeeAdvocates.net
