LEOs Get Early Retirement and Extra Perks—But Here’s What You Still Need to Watch

Site Admin
June 2, 2025

Key Takeaways

Law Enforcement Officers (LEOs) receive enhanced retirement benefits, including early retirement eligibility and a more generous pension formula—but these benefits come with specific conditions and trade-offs.
Even with these perks, your financial security depends on how well you manage decisions about survivor benefits, TSP withdrawals, healthcare coverage, and post-retirement income sources.

What Makes LEO Retirement Different

As a Law Enforcement Officer under the Federal Employees Retirement System (FERS), your retirement path comes with a unique structure that rewards early retirement and high-risk service. In 2025, these enhanced benefits are still available, but they require close attention to eligibility rules, timing, and coordination with other benefits.

Early Retirement Eligibility

LEOs can retire at age 50 with 20 years of service, or at any age with 25 years of covered service. This is considerably earlier than standard FERS employees, who generally need to reach their Minimum Retirement Age (MRA), which ranges from 55 to 57 depending on birth year.

To qualify for these special provisions:

Your service must be in a position classified as primary or rigorous law enforcement duty.
You must complete at least 3 years of continuous service in a qualifying LEO position immediately before retirement.

Missing any of these can disqualify you from early retirement, so it’s critical to verify your eligibility with your agency’s HR office well in advance.

Enhanced Pension Calculation

Under FERS, LEOs receive a higher pension multiplier:

1.7% of your high-3 average salary for the first 20 years of LEO service.
1.0% for each year beyond 20.

This formula means a 25-year LEO could retire with 34% of their high-3 salary (1.7% x 20 + 1.0% x 5). Compare this to a regular FERS employee with the same tenure, who would receive 25%.

The difference adds up quickly—but only if you meet the service and age requirements.

The FERS Supplement Only Goes So Far

LEOs who retire before age 62 and meet regular eligibility (not MRA+10) qualify for the FERS Annuity Supplement. This benefit mimics a Social Security payment based on your federal service, helping to bridge the gap until age 62.

While helpful, the supplement has two limitations:

It ends at age 62 whether or not you start Social Security.
It is subject to the Social Security earnings test. If you work after retirement and earn more than $23,480 in 2025, your supplement may be reduced or eliminated.

If you plan to work post-retirement, you’ll need a strategy to compensate for the loss of the supplement.

Survivor Elections and Pension Reductions

Choosing a survivor benefit is a one-time, irrevocable decision made at retirement. If you elect a survivor annuity, your pension is permanently reduced to provide future income to your spouse.

FERS offers two levels:

50% survivor benefit – Reduces your annuity by 10%.
25% survivor benefit – Reduces your annuity by 5%.

If you elect no survivor benefit, your spouse loses FEHB coverage upon your death unless other conditions apply. It’s vital to understand the long-term consequences before waiving this protection.

FEHB and Medicare Considerations

Retiring before age 65 means you’ll continue your FEHB plan without Medicare initially. When you reach 65, Medicare Part A is usually automatic. But Medicare Part B requires an active enrollment decision.

If you’re retired and enrolled in FEHB:

You’re not required to enroll in Medicare Part B.
However, many LEO retirees choose to enroll to reduce out-of-pocket costs, especially since some FEHB plans waive deductibles or copays for those with both FEHB and Medicare B.

In 2025, Medicare Part B premiums have increased to $185/month, with a $257 annual deductible. Weigh these costs against your FEHB plan benefits.

TSP Withdrawals and Market Risk

The Thrift Savings Plan (TSP) plays a critical role in your retirement income. Once you retire, you can:

Leave your money in the TSP.
Start monthly payments.
Take partial or full withdrawals.
Roll over funds to an IRA or other plan.

LEOs tend to retire younger, which increases the time your TSP needs to last. Poor withdrawal strategy or high-risk allocations can erode your savings.

In 2025, the contribution limits are $23,500 (plus catch-up contributions for those 50+), but withdrawals matter more post-retirement. A good rule of thumb is the 4% rule, but you may need a more conservative approach given your early retirement.

Consider working with a financial professional to develop a withdrawal strategy based on your risk tolerance and income needs.

Taxes Don’t Retire When You Do

Your FERS annuity, TSP withdrawals, and eventually Social Security are all taxable income. While some states don’t tax federal pensions, many do. Plus, early TSP withdrawals before age 59½ (unless taken as part of a life expectancy schedule) can trigger a 10% IRS penalty.

Since most LEOs retire in their 50s, avoiding early withdrawal penalties takes careful planning. IRS Rule 72(t) can help, allowing for Substantially Equal Periodic Payments (SEPPs) from TSP or IRAs without penalty—but the rules are strict and must be followed exactly.

Working with a tax advisor familiar with LEO retirement is highly recommended.

What If You Switch to a Non-LEO Role?

If you move into a regular federal position before completing 20 years of LEO service, you may lose eligibility for the enhanced formula and early retirement age.

However, if you complete your 20 years and then switch to a non-LEO role, your LEO years are preserved, and you can still retire under the enhanced terms—if you meet the age/service combination.

The order of your service matters.

Cost-of-Living Adjustments (COLAs) Aren’t Always Immediate

FERS retirees receive COLAs starting at age 62. LEOs who retire in their 50s will not see COLAs for several years unless they retire under disability.

This inflation gap can shrink your pension’s real value. If inflation remains high, as it did in 2022 and 2023, the difference can be noticeable by the time you’re eligible.

Make sure your retirement plan accounts for years without COLAs. Building an income cushion from your TSP or other sources may help.

Health and Life Insurance Costs Rise With Age

FEHB premiums increase annually, and if you keep coverage in retirement, you’ll continue paying your share. In 2025, average FEHB premiums increased by over 11%.

If you’re carrying FEGLI (Federal Employees’ Group Life Insurance), premiums increase sharply after age 65 unless you chose the 75% reduction option at retirement. Even with that option, premiums before age 65 can become burdensome.

Review your ongoing insurance costs and assess what coverage you really need. Downsizing your FEGLI or switching to less expensive policies may be worth considering.

You May Still Need to Work After Retirement

Despite early retirement, many LEOs return to the workforce in another capacity. Whether due to rising living costs, health insurance needs, or personal fulfillment, a second career can provide:

Supplemental income
Delay in tapping into Social Security
Employer-sponsored health insurance until Medicare kicks in

Just keep in mind that returning to a federal position may impact your retirement benefits if it’s not structured properly. In some cases, your annuity may be offset or suspended during reemployment.

Retirement Perks Don’t Replace Planning

Yes, LEOs enjoy a more generous retirement setup—but it’s not automatic security. Everything from the timing of your exit, TSP usage, and Medicare enrollment to how you elect survivor benefits shapes your post-career life.

If you don’t know how these parts fit together, you could end up with gaps in your income or healthcare that aren’t easy to fix.

Speak with a licensed professional listed on this website to walk through your options and develop a strategy that fits your career and retirement goals.