Retiring From Federal Government: Eligibility, Annuity, and Benefits

Retiring from the federal government runs through one of two pension systems, and what you receive depends on which system covers you, your age at separation, and your years of creditable service. Employees hired before January 1, 1984 fall under the Civil Service Retirement System (CSRS); everyone hired since is under the Federal Employees Retirement System (FERS).¹ Both are administered by the Office of Personnel Management and codified in Title 5 of the U.S. Code, but the eligibility rules, the pension formulas, and the surrounding benefits differ enough that the same career produces very different retirement outcomes depending on which one you are in.²

Which System Covers You

CSRS is a standalone pension. Your annuity is based entirely on your salary and years of service, and during your federal career you did not pay Social Security tax on your federal wages. CSRS retirees historically relied almost exclusively on the pension plus personal savings.

FERS replaced CSRS for all new hires starting in 1984 and works as a three-part package: a basic pension annuity, Social Security, and the Thrift Savings Plan.³ The FERS pension is smaller than a comparable CSRS pension because it assumes you are also collecting Social Security and drawing on a TSP balance. Pre-1984 employees were given the chance to switch to FERS; anyone who did not switch remains under CSRS.

When You Can Retire With Full Benefits

Full FERS eligibility depends on your Minimum Retirement Age, which ranges from 55 to 57 by birth year. Anyone born between 1953 and 1964 has an MRA of 56. Birth years 1965 through 1969 slide up between 56 and 57, and anyone born in 1970 or later has an MRA of 57.⁴

Three paths lead to a full, unreduced FERS annuity:

Your MRA with at least 30 years of creditable service.
Age 60 with at least 20 years of service.
Age 62 with at least 5 years of service.

A fourth path, commonly called MRA+10, lets you retire at your MRA with at least 10 but fewer than 30 years of service. It carries a steep cost: your annuity is permanently reduced by 5 percent for every year you are under age 62 when payments start.⁴ For someone leaving at 56, that is a 30 percent permanent cut. The reduction never goes away, even after you reach 62.

CSRS eligibility uses the same combinations, MRA with 30 years, 60 with 20, or 62 with 5, but CSRS participants do not face the MRA+10 penalty in the same form, and the pension formula itself is more generous because it stands alone without Social Security.

Other Ways to Leave Before Full Eligibility

If your agency is downsizing and OPM has approved Voluntary Early Retirement Authority, you can retire with 25 years of service at any age, or with 20 years if you are at least 50.⁵ VERA is not always on offer; the agency has to ask for it.

If you leave federal service without meeting any immediate eligibility threshold and you have at least five years of creditable civilian service, you can claim a deferred FERS annuity starting at age 62.⁶ Nothing is paid between your separation and the day you apply at the qualifying age, and if you take a refund of your retirement contributions on the way out, you forfeit the deferred benefit entirely.

Phased retirement lets an eligible employee move to a part-time schedule while drawing a portion of the annuity, but it requires agency agreement and eligibility for an immediate, unreduced retirement.⁷

FERS disability retirement is available at any age if you have at least 18 months of creditable civilian service, your condition is expected to last at least a year, and your agency certifies that it cannot accommodate you and has considered you for reassignment.⁸ You must also apply for Social Security disability, though Social Security approval is not required for the FERS benefit.

How Your Annuity Is Calculated

Both systems anchor the pension to your “high-3” average salary, the highest average basic pay you earned during any three consecutive years of service.⁹ Locality pay and certain differentials count. Overtime and most bonuses do not. For most people the high-3 falls in the last three years of work, but the window can sit anywhere in your career.

The FERS Formula

The standard FERS annuity equals 1 percent of your high-3 multiplied by your total years and months of service. If you retire at 62 or older with at least 20 years of service, the multiplier rises to 1.1 percent.⁹ That tenth of a percent matters. Someone with a $100,000 high-3 and 30 years of service would receive $30,000 a year at 1 percent or $33,000 at 1.1 percent.

The CSRS Formula

CSRS uses a tiered formula: 1.5 percent of your high-3 for the first 5 years, 1.75 percent for the next 5 years, and 2 percent for every year beyond 10.¹⁰ The maximum benefit caps at 80 percent of your high-3, which takes roughly 41 years and 11 months of service to reach.

Sick Leave Credit

Unused sick leave at retirement converts into additional service time in the annuity formula. Every 2,087 hours counts as a full year, with smaller balances credited proportionally.¹¹ One caveat: this extra time raises the payment but cannot be used to meet the minimum service required for eligibility. You cannot use sick leave to push 29 years into 30 for the MRA+30 rule.

The FERS Special Retirement Supplement

If you retire under FERS before 62, you cannot yet collect Social Security. The Special Retirement Supplement pays a monthly amount designed to approximate the Social Security benefit you earned during your FERS service, until you turn 62. You qualify if you retire at your MRA with 30 years, at 60 with 20 years, or under certain involuntary or special provisions such as an early retirement during a reduction in force.¹² MRA+10 retirees and those on deferred or disability retirement do not qualify.

The supplement uses the Social Security benefit formula as if you were already 62, multiplied by a fraction of your FERS-creditable years over 40.¹² Thirty years of FERS service produces 75 percent of the estimated Social Security amount. The supplement ends automatically the month you turn 62.

An earnings test applies. In 2026, if you earn more than $24,480 from wages or self-employment, the supplement is reduced by $1 for every $2 over that threshold.¹³ Investment income, TSP withdrawals, and rental income do not count. This catches people who move into a private-sector job after leaving government.

Social Security, the TSP, and the Fairness Act

FERS employees pay into Social Security throughout their federal careers and collect it starting at 62 or later, layered on top of the annuity and the supplement. CSRS employees generally did not pay Social Security on their federal wages, but many earned Social Security credits from earlier or concurrent private-sector work. Before 2024, those credits were reduced by the Windfall Elimination Provision, and any spousal or survivor Social Security benefits were reduced by the Government Pension Offset. The Social Security Fairness Act, signed in January 2025, repealed both provisions for benefits payable from January 2024 onward.¹⁴ CSRS retirees with outside Social Security credits should now see the full amount they earned, and the Social Security Administration has been issuing adjustments and back pay.

The Thrift Savings Plan is the federal 401(k) equivalent and, for most FERS employees, the biggest variable in retirement wealth. In 2026, the contribution limit is $24,500, with catch-up contributions of $8,000 for employees ages 50 to 59 (and 64 and older) and $11,250 for those who turn 60, 61, 62, or 63 during the year.¹⁵

Once you separate, you have four withdrawal options: a partial withdrawal of at least $1,000; a total withdrawal; installment payments (a fixed dollar amount or an amount from IRS life expectancy tables, paid monthly, quarterly, or annually); or a life annuity purchased through the TSP’s outside vendor. You can combine them.¹⁶ Roth TSP withdrawals are tax-free as long as five years have passed since your first Roth contribution and you are at least 59½.¹⁷ Required Minimum Distributions kick in by April 1 of the year after you turn 73 if you were born before 1960 and have separated from service; if you were born in 1960 or later, the RMD age is 75.¹⁸

Health and Life Insurance You Can Carry Into Retirement

To keep Federal Employees Health Benefits (FEHB) coverage as a retiree, you must have been continuously enrolled in an FEHB plan, or covered as a family member, for the five years of service immediately before your annuity starts, or for the entire period since your first opportunity to enroll if that is less than five years.¹⁹ The rule sits at 5 U.S.C. 8905(b).²⁰ OPM has limited authority to waive it. If you dropped FEHB mid-career and picked it back up less than five years before retirement, you may lose the ability to continue coverage into retirement.

Federal Employees’ Group Life Insurance (FEGLI) uses a comparable five-year rule, applied separately to basic coverage and to each type of optional coverage you want to keep.²¹ After age 65, basic coverage begins a gradual reduction unless you elected a paid-up 75 percent reduction option or a no-reduction option earlier.

If you carry Federal Long Term Care Insurance, coverage is portable and continues as long as you pay premiums. Once your annuity is finalized, OPM can deduct premiums directly; during the interim period, you are billed.²²

COLAs and Survivor Elections

Federal pensions receive annual cost-of-living adjustments tied to the Consumer Price Index. CSRS retirees receive the full CPI increase. FERS retirees receive a smaller “diet COLA”: if inflation is 2 percent or less, the full amount; if inflation is between 2 and 3 percent, capped at 2 percent; if inflation is above 3 percent, the CPI figure minus 1 percentage point.²³ For 2026, CSRS retirees received 2.8 percent; FERS retirees received 2.0 percent.²⁴

FERS retirees under 62 generally receive no COLA until the first December after they turn 62. Disability retirees, survivor annuitants, and those retired under special provisions for law enforcement officers and firefighters are exceptions and receive COLAs immediately.²⁴ Over a long retirement, the gap between the two systems compounds meaningfully.

On the application, you decide whether to provide a survivor annuity for your spouse. Under FERS, a full survivor benefit pays your surviving spouse 50 percent of your unreduced annuity; a partial election pays 25 percent.²⁵ In exchange, your own monthly payment drops permanently: 10 percent for a full election, roughly 5 percent for the partial one.²⁶ Married employees are presumed to elect the full benefit unless both spouses consent in writing to something smaller. In most circumstances the decision is one-time and irrevocable, so it deserves careful math for both scenarios.

Filing, Interim Payments, and Taxes

FERS employees file Standard Form 3107 to apply for immediate retirement.²⁷ CSRS employees file Standard Form 2801.²⁸ Both ask for a detailed employment history, including temporary and seasonal work. Your agency’s HR office verifies your service against your Official Personnel Folder and sends the package to OPM.

Military service after 1956 counts under FERS only if you complete a military service deposit, paying into the retirement fund based on a percentage of your military base pay. Standard Form 3108 (FERS) or Standard Form 2803 (CSRS) handles it, and finishing the deposit before your retirement date is strongly recommended; military time not covered by a completed deposit may be excluded from your annuity.²⁹ A DD Form 214 documents the service. If you are married and elect anything less than the maximum survivor benefit, your spouse must sign Standard Form 3107-2 (FERS) or Standard Form 2801-2 (CSRS). Marriage certificates and any prior divorce decrees go with the file.

Final processing at OPM can take several months. In the meantime, OPM issues interim payments generally around 80 percent of your estimated net annuity, with a published range of 60 to 80 percent for more complex files.³⁰³¹ Interim payments do not reflect survivor deductions or certain other adjustments, which is why OPM keeps them below 100 percent. When the final calculation posts, you receive a breakdown and a retroactive payment for the difference. Federal tax withholding applies from the first interim payment.

Your annuity is taxable income because most of your contributions were made pre-tax. You control federal withholding by filing IRS Form W-4P with OPM.³² Each January, OPM issues a Form 1099-R with total payments, the taxable amount, and taxes withheld. A small portion of each payment may be a tax-free return of your after-tax contributions if you made any, but for most retirees the annuity is almost entirely taxable. State tax treatment varies: some states exempt federal pensions, some tax them as ordinary income, and some give partial exclusions based on age or income. Check your state’s rules before your first full year of retirement.

Working Again After You Retire

If you return to federal employment as an annuitant, your annuity generally continues, but your salary is offset by the annuity amount. The agency pays your full salary and then remits the annuity portion back to OPM for the retirement fund.³³ A $30,000 annuity paired with an $80,000 position nets $50,000 in salary plus the $30,000 annuity — the same $80,000 you would have earned otherwise. OPM can waive the salary offset in exceptional cases, but waivers are not routine. Private-sector employment does not trigger the offset, though under FERS it may reduce the Special Retirement Supplement through the earnings test until you reach 62.

1
U.S. Office of Personnel Management. Retirement Facts 13 – CSRS Offset Retirement
2
Office of the Law Revision Counsel. 5 USC Chapter 84 – Federal Employees Retirement System
3
Congressional Research Service. Retirement Benefits for Members of Congress
4
Defense Civilian Personnel Advisory Service. Retirement Eligibility
5
U.S. Office of Personnel Management. Voluntary Early Retirement Authority
6
U.S. Office of Personnel Management. Applying for Deferred or Postponed Retirement Under the Federal Employees Retirement System
7
U.S. Office of Personnel Management. Phased Retirement
8
U.S. Office of Personnel Management. Eligibility
9
U.S. Office of Personnel Management. Computation
10
Defense Civilian Personnel Advisory Service. Annuity Computation
11
U.S. Office of Personnel Management. Retirement Facts 8 – Credit for Unused Sick Leave Under the Civil Service Retirement System
12
U.S. Office of Personnel Management. CSRS and FERS Handbook – Retiree Annuity Supplement
13
Social Security Administration. Receiving Benefits While Working
14
Social Security Administration. Social Security Fairness Act – WEP and GPO Update
15
Thrift Savings Plan. 2026 TSP Contribution Limits
16
Thrift Savings Plan. Withdrawals in Retirement
17
Thrift Savings Plan. Traditional and Roth TSP Contributions
18
Thrift Savings Plan. Taking Money From Your Account
19
U.S. Office of Personnel Management. Annuitants
20
Office of the Law Revision Counsel. 5 USC 8905 – Election of Coverage
21
U.S. Office of Personnel Management. What Is the Five-Year/All Opportunity Rule for Continuing Life Insurance Into Retirement
22
FLTCIP. Your Guide to Retiring From or Leaving Federal Service
23
U.S. Office of Personnel Management. How Is the Cost-of-Living Adjustment Determined
24
U.S. Office of Personnel Management. Learn More About Cost-of-Living Adjustments
25
U.S. Office of Personnel Management. Learn More About Survivor Benefits and Retirement
26
Office of the Law Revision Counsel. 5 USC 8419 – Survivor Reductions Computation
27
U.S. Office of Personnel Management. Standard Form 3107 – Application for Immediate Retirement
28
U.S. Office of Personnel Management. Application for Immediate Retirement – Civil Service Retirement System
29
U.S. Office of Personnel Management. Military Deposits
30
U.S. Office of Personnel Management. When Will I Receive My First Retirement Payment
31
U.S. Office of Personnel Management. Retirement Quick Guide
32
Internal Revenue Service. About Form W-4P – Withholding Certificate for Periodic Pension or Annuity Payments
33
National Finance Center. Salary and Benefits for Reemployed Annuitants