For those households trying to determine what age they will be on their last day in the workingworld the variety of factors that come into play can make the decision very difficult. Are the children and grandchildren fully on their own? Should we sell the house now and buy a new one down south? Or should we buy the new one now and rent it or cover both mortgages until we know we are ready? Can we afford to retire now or should we wait until we have further assets accumulated? If we retire now and then realize our funds won’t last will I be able to go back to work? What about health insurance prior to age 65?
Once these circumstances have been discussed then for FERS employees it will be vital to know your eligibility to retire under what is called the minimum retirement age or MRA. Any one of the scenarios below will allow enough credible service to retire and immediately receive a pension.
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The ideal age for your household is determined by your circumstances, affordability, and when the government will allow you to step out with maximum benefits. But is it enough? Have you accumulated enough in investments assets, when combined with the pension and your spouse’s benefits, if present, to produce enough cash flow to retire?
If you are having trouble with this step it is advisable to work with a wealth advisor to have them create a cash flow model based on your personal situation. However, whether you are working with someone or you are analyzing your plan on your own keep in mind that FERS employees receive an additional benefit between the age you retire and age 62. This just might be the extra income you can count on to get you over the hurdle of the cash flow equation. This benefit is called the Special Retirement Supplement or SRS. Eligibility for the payment requires one of the following circumstances:
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1. After the Minimum Retirement Age (MRA) with 30 years of service
2. At age 60 with 20 years of service
3. Upon involuntary or early voluntary retirement – See OPM for details
The amount payable under this benefit is an estimation of what would be received from Social Security and is paid until age 62. At this age generally Social Security is available and the household would choose whether to initiate payments under early retirement, or choose to defer for a larger benefit which is another decision process based on family factors.
Between FERS, SRS, normal social security, assets, rental property, and a spouse’s possible equivalent benefits households may find the diversified sources really do add up to enough to accomplish your retirement dreams. If you would like to discuss your situation with an Advisor, please call 1.888.740.3501 or email bkuhn@psgplanning.com.
Securities offered through Triad Advisors, Member FINRA / SIPC. Advisory Services offered through Planning Solutions Group, LLC. Planning Solutions Group, LLC is not affiliated with Triad Advisors. PSG Clarity is a division of Planning Solutions Group, LLC.
