The MRA+10 retirement is the FERS pathway that lets federal employees separate before qualifying for an immediate, unreduced annuity. It requires only your MRA (which is 55 to 57 depending on birth year) and 10 years of creditable FERS service. It is the only pathway that allows retirement at the MRA with fewer than 30 years of service. The trade is a permanent reduction in the annuity that is steeper than most people anticipate.

Let me walk through exactly how the reduction is calculated and when the MRA+10 path actually makes sense.

The MRA+10 eligibility test.

You qualify for an MRA+10 retirement when both of the following are true:

  • You have reached your MRA (55 to 57, depending on your birth year).
  • You have at least 10 years of creditable FERS service.

That is the entire eligibility test. There is no requirement that the 10 years be continuous, and there is no requirement that you retire immediately upon reaching eligibility. The 10 years must, however, be covered by FERS contributions; service under another system generally does not count toward the 10-year FERS service requirement.

The reduction formula.

Under 5 U.S.C. § 8412, an MRA+10 annuity is reduced by 5% per year (or 5/12 of 1% per month) for each year the retiree is under age 62 when the annuity begins. The reduction is applied to the gross annuity, before the survivor election.

Worked example: a 57-year-old (MRA cohort born 1970 or later) with a high-3 of $120,000 and 25 years of service would, absent the reduction, receive an annual annuity of $30,000 (1.0% × 25 years × $120,000). The MRA+10 reduction at age 57 is 5% × 5 = 25%. The actual annual annuity starts at $22,500, or $1,875 per month. For life.

The reduction does not go away. It does not phase out. It is a permanent haircut on the gross annuity, surviving every COLA and every survivor election adjustment. It is also applied after sick-leave credit is added to service, which is a small consolation.

When MRA+10 actually makes sense.

The MRA+10 reduction is severe enough that it should never be the default choice. There are, however, real circumstances where it is the right path:

  • Severe health or caregiver circumstances. Sometimes the cost of not retiring is higher than the reduction. The math changes when you put a value on your health.
  • VERA or agency-directed early retirement. Some involuntary separation situations offer MRA+10 as the floor, with waived or reduced reductions.
  • Spouse’s job or health insurance coverage. If your spouse has access to employer coverage, the FEHB loss at retirement is partly mitigated, and the MRA+10 path becomes more viable.
  • Substantial non-pension assets. A federal employee with a $2M TSP balance may reasonably trade a 25% annuity reduction for the freedom to retire early, because the TSP balance is large enough to absorb the income gap.

In every one of those cases, the decision is being made with the reduction in view, not in spite of it.

The postponement alternative.

If you qualify for MRA+10 but want to avoid the reduction, you can postpone the commencement of your annuity. You separate from federal service at your MRA, your annuity doesn’t start, and the reduction is calculated against your age at the date you choose to begin receiving the annuity — which can be up to age 62, when the reduction disappears entirely.

Postponing an MRA+10 annuity is a useful tool, but it has consequences for FEHB and FEGLI during the postponement period. We’ll cover those in the next article.