Should You Wait Till Age 65 Or Older To Retire?

There are a number of good reasons why FERS employees should wait until age 62 to retire. The advantages we’ve discussed before include:

• The FERS 10% Bonus At Age 62
• High-3 Salary Calculation For An Even Larger Annuity
• Eligibility For Cost Of Living Adjustments (COLA)
• More Time To Make TSP Contributions Plus Catch-Up Contributions

Add to this, given the economic uncertainty triggered by the COVID pandemic, working longer than your FERS Minimum Retirement Age (MRA) is one way to ride out the

storm.

Waiting Till 65 Or Older Offers The Same Advantages, Compounded  

If you push your retirement age from 62 to 65, you gain three more years of TSP contributions and employer agency matches. That’s when the magic of compound interest works even harder for you. Don’t forget you also have three more years to make Catch-Up Contributions

Working longer can grow your FERS Annuity. In the summer of 2022, President Biden formalized his plan to provide civilian federal workers with an average 4.6% pay increase in 2023. Working till age 65 or longer gives you more years to bump up your High-3 Salary Calculation with the pay raise.

“If there’s longevity in your family, retiring at age 65 or older puts you closer to claiming your maximum Social Security benefit at 70.”

Consider Your Social Security Benefits 

Working longer can possibly increase the amount of your Social Security benefit when they calculate your highest 35 years of earnings. If there’s longevity in your family, retiring at age 65 or older puts you closer to claiming your maximum Social Security benefit at 70. It makes sense to earn an extra 8% per year beyond your Full Retirement Age to maximize your Social Security for the rest of your life.

If There’s Longevity In Your Family, You May Need To Work Longer

Believe it or not, one of the biggest threats to your financial security in retirement is longevity. Living longer simply costs more money and puts you at risk of running out of savings in retirement. 

There’s a big difference in the amount of retirement income it will take to live comfortably during a 20-year retirement compared to a 30-year retirement. Yet studies indicate Americans tend to under-estimate their longevity. Meanwhile, actuary tables show that when you live to age 69, your chances of living until 80 increase a few percentage points.

Let’s Re-Cap

If you work till 65 or older, you can increase your FERS annuity and your Social Security benefit plus keep your TSP growing a few more years. That’s a very good deal especially when you consider the current economic uncertainty.