Dana is 56 and has twenty-two years in at a mid-sized agency. Her reorganized office is offering no buyout and no promotion, just more of the same. Her MRA is 56, so she pulls up the OPM retirement estimate and sees a number that stops her: about $14,600 a year, when her friend who retired at 60 with similar service gets nearly $21,000.

Same career. Same high-3. A difference of more than $6,000 a year, for life. That gap is the MRA+10 tradeoff.

What MRA+10 actually offers

Under FERS, you can retire when you reach your minimum retirement age (MRA) with at least 10 years of creditable service. Your MRA is between 55 and 57 depending on your birth year. If you have 30 years at MRA, you get an unreduced pension. With fewer than 30 years, you are in MRA+10 territory.

The formula starts out ordinary: 1 percent of your high-3 average salary for each year of service. Then comes the penalty. If your annuity starts before age 62, it is reduced by 5 percent for each year you are under 62, calculated month by month.

For Dana, the math runs like this:

  • High-3 salary: $95,000
  • Service: 22 years
  • Unreduced annuity: 1% x 22 x $95,000 = $20,900
  • Years under 62 at age 56: 6, so a 30% reduction
  • Reduced annuity: $14,630

That reduction does not fade. It is permanent, and it carries into any survivor benefit calculation too.

Your real choice: start now or postpone

Many people miss that MRA+10 is not a single option. You can retire at MRA and begin the annuity right away, or you can retire and postpone the start date.

Postponing can shrink or erase the reduction:

  • With 20 or more years of service, postponing the start until age 60 means no reduction at all. Dana would get the full $20,900.
  • With 10 to 19 years, you would have to wait until 62 to avoid the reduction.
  • If you start somewhere in between, the reduction is smaller than at MRA but still applies.

So Dana's real question is not "Do I take the 30% hit?" It is "How do I pay for the four years between 56 and 60?"

The bridge problem

Here is where the retirement hub's other topics start to matter. Suppose Dana needs $45,000 a year before tax to live on. Two paths:

Path A: Start the reduced annuity at 56. The pension covers $14,630. She pulls about $30,370 a year from her TSP and other savings, roughly $121,500 over four years. She then lives on $14,630 for life, plus whatever COLAs apply.

Path B: Postpone to 60. She covers the full $45,000 from savings for four years, about $180,000. At 60, she starts a $20,900 annuity.

The difference in savings spent is roughly $58,500. For that, she buys an extra $6,270 a year for the rest of her life. That is a payout of about 10.7 percent on the extra dollars. You will not find many guaranteed lifetime income deals that good. Even if she lives only to 70, she comes out ahead on pure cash (ignoring investment growth on the $58,500), and every year past that widens the gap.

Of course, there are caveats. That math assumes she has enough in savings to bridge four years without wrecking her portfolio, that she's in good health, and that her TSP withdrawals don't create tax trouble. If she has a spouse with a pension or part-time work income, the picture shifts again.

What you lose by retiring on MRA+10

The reduction is only part of the cost.

No FERS supplement

The FERS annuity supplement, which approximates your Social Security benefit before 62, is paid only to people retiring under an immediate, unreduced annuity. MRA+10 retirees don't qualify, whether they start the annuity right away or postpone it. If you were counting on the supplement as a bridge to Social Security, take it out of your plan.

COLAs start later

FERS cost-of-living adjustments generally begin at 62 for non-disability retirees. A reduced annuity that starts at 56 will sit flat for six years while inflation keeps moving. That is a quiet drag that rarely shows up in the first estimate.

Health insurance decisions

You can generally keep FEHB into retirement if you've been covered for the five years before you retire and you retire on an immediate annuity. MRA+10 retirees who postpone their annuity have specific rules about carrying coverage, including how premiums are paid when there's no annuity check to deduct from. Confirm the details with your agency HR office and OPM before you sign anything. This is the