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Four Early Retirement Options Federal Workers Are Using to Leave Their Jobs Sooner and Happier

aaron steele
July 30, 2025

Key Takeaways

Federal workers have multiple early retirement options that cater to different career paths, needs, and financial situations.
Planning ahead with a clear understanding of benefits and timelines can help you retire sooner and on your own terms.

The Appeal of Early Retirement

Early retirement has become a common aspiration among federal employees, and for good reason. Whether you’re seeking a change in pace, pursuing personal goals, or wanting more time with loved ones, the idea of stepping away from work before the traditional retirement age is tempting. But how can you make it a reality without compromising your financial security? Federal workers have several paths to early retirement, each with its own benefits, rules, and timelines.

Let’s explore four key early retirement options federal employees are leveraging to exit their careers sooner and with confidence.

1. The MRA+10 Option: Early Flexibility, But With Penalties

The Minimum Retirement Age (MRA)+10 option is a popular choice for federal employees under the Federal Employees Retirement System (FERS). If you’ve reached your MRA (which ranges from 55 to 57, depending on your birth year) and have at least 10 years of service, you can retire early. However, there’s a catch: your pension will be reduced by 5% for every year you’re under 62.

Key Features:

Eligibility: Meet your MRA with at least 10 years of creditable service.
Pension Reduction: 5% reduction per year under 62.
Health Insurance: You can keep your FEHB coverage, but you must retire with immediate benefits to maintain it.

Best for:

This option is ideal if you’re willing to trade a smaller pension for the flexibility of leaving federal service early. Planning ahead to minimize the financial impact of the reduction can make this a viable path.

2. Voluntary Early Retirement Authority (VERA): When Agencies Need Downsizing

The Voluntary Early Retirement Authority (VERA) allows federal employees to retire early when their agency is undergoing restructuring, downsizing, or reorganization. Unlike MRA+10, VERA doesn’t penalize your pension based on age.

Key Features:

Eligibility: At least 20 years of service at age 50 or 25 years of service at any age.
Pension: No age-related reductions.
Approval: Your agency must offer VERA, and you need approval to use it.

Best for:

VERA is an excellent option for employees in agencies offering buyouts or restructuring packages. It’s particularly beneficial if you’ve accumulated significant years of service and want to transition smoothly into retirement.

3. Special Provisions for Law Enforcement and Other Groups

Certain federal employees, such as law enforcement officers (LEOs), air traffic controllers, and firefighters, have access to enhanced early retirement benefits. These provisions recognize the physically and emotionally demanding nature of their roles and allow retirement at younger ages.

Key Features:

Eligibility: Generally, 20 years of service and age 50, or 25 years of service at any age.
Pension Calculation: These groups receive a higher pension multiplier (1.7% for the first 20 years of service).
Special Supplement: FERS retirees in these roles receive a Special Retirement Supplement (SRS) until they qualify for Social Security at age 62.

Best for:

If you fall into one of these specialized categories, early retirement is designed to reward your demanding career. The generous pension calculation and SRS can provide financial stability for years to come.

4. Deferred Retirement: A Strategic Pause

For those not ready to retire immediately but who wish to leave federal service, a deferred retirement might be the answer. Under this option, you leave your position but delay receiving your pension until you meet the age and service requirements for FERS.

Key Features:

Eligibility: At least 5 years of creditable service.
Pension Start Date: Begins at age 62 with at least 5 years of service or earlier with more years of service (e.g., age 60 with 20 years).
Health Insurance: You won’t retain FEHB coverage unless you meet specific criteria.

Best for:

Deferred retirement works well if you’re ready to transition out of federal employment but have other income or savings to bridge the gap until your pension begins. It’s a flexible option for career changers or those pursuing entrepreneurial ventures.

Financial Considerations for Early Retirement

Understanding Your Pension

Your federal pension is a cornerstone of your retirement plan. It’s crucial to calculate how each early retirement option impacts your monthly annuity. Tools like FERS calculators can help you project your benefits based on service years and salary history.

Health Insurance Matters

Retaining health insurance through the Federal Employees Health Benefits (FEHB) program is a significant advantage. However, not all early retirement options guarantee continued coverage. Ensure you meet eligibility requirements to avoid losing this benefit.

Thrift Savings Plan (TSP)

Your TSP account provides a vital source of supplemental income. Consider how you’ll manage withdrawals, especially if you’re retiring before age 59½ to avoid early withdrawal penalties.

Maximizing Your Benefits

Coordinate with Social Security

FERS retirees often rely on Social Security benefits to supplement their income. If you’re retiring early, factor in the earliest age you can claim Social Security (62) and how it affects your overall income.

Leverage the Special Retirement Supplement

If you qualify for the FERS Special Retirement Supplement, it’ll provide additional income until you’re eligible for Social Security. This benefit can bridge the gap and ease your financial transition.

Timing Your Retirement

Choosing the right time to retire can maximize your annuity. Retiring at the end of a pay period or calendar year can increase your service time and final payout.

Challenges of Early Retirement

While the freedom of early retirement is appealing, it’s essential to prepare for potential challenges:

Reduced Income: Early retirement may mean a smaller pension and reliance on savings.
Healthcare Costs: If you don’t retain FEHB coverage, you’ll need an alternative plan until you’re Medicare-eligible.
Longevity Risk: Ensure your savings and investments can sustain you for decades.

Addressing these challenges with a well-thought-out plan can make early retirement both feasible and enjoyable.

Preparing for a Smooth Transition

Review Your Financial Plan

Meet with a financial advisor to evaluate your retirement savings, investments, and anticipated expenses. Ensure you have a clear budget and plan for long-term financial health.

Explore Post-Retirement Opportunities

Retirement doesn’t mean the end of productivity. Many retirees find fulfillment in part-time work, volunteering, or pursuing hobbies. These activities can supplement income and enrich your retirement years.

Stay Informed

Rules and benefits for federal employees can change. Keep up to date with regulations to make informed decisions about your retirement.

Your Path to Early Retirement Awaits

Retiring early as a federal employee is a dream well within reach, provided you plan strategically. By understanding the options available, such as MRA+10, VERA, special provisions, and deferred retirement, you can create a plan that aligns with your goals. Take charge of your future, and enjoy the freedom and opportunities that early retirement offers.

Aaron Steele

After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.

Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.

Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.

Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.

Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.

With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

Disclosure: Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.