Postponed vs. Deferred Federal Retirement: Understanding the Key Differences


As a federal employee nearing retirement, you may find yourself faced with needing to decide between a postponed federal retirement and a deferred federal retirement. While both options can impact your federal retirement benefits, it's crucial to understand the differences between the two. In this article, we will delve into the contrasting features of postponed and deferred federal retirement, discuss the benefits that may be affected, and guide you on how to determine your eligibility for each.

Postponed Federal Retirement:

Postponed federal retirement refers to the situation where federal employees choose to delay their retirement when they want to stop working for the government, but don’t have the correct age and years of service to retire on an immediate annuity without reductions. To qualify for a Postponed retirement, employees must be at least at their Minimum Retirement Age (MRA) with 10 or more years of service and leave their FERS contributions in the system. They are eligible for Federal Employee Health Benefits (FEHB) once they start their annuity. 

Real-Life Example:

Consider John, a federal employee who reaches his MRA at 57 and has 15 years of service. He no longer wants to work as a FERS employee because of a different job opportunity. If he retired immediately, he would have to pay a permanent 5% reduction of his pension for every year he is less than 62 years old. That would be a 25% permanent reduction in his pension check! Instead, he decides to postpone his retirement until the age of 62. By doing so, he avoids those permanent penalties. Once he starts receiving his pension, he can resume his FEHB, which is a huge benefit. 

Deferred Federal Retirement:

On the other hand, deferred federal retirement can occur when employees separate from federal service at any age with at least 5 years of service, but do not meet the requirements to qualify for an immediate, unreduced annuity (MRA+30, 60 with 20 years or 62 with 5 years) and does not qualify for a postponed retirement (MRA+10). In this case, employees may be eligible to receive deferred retirement benefits at a later date, usually when they reach the age of 62. They must leave their FERS contributions in the system. They are NOT eligible for FEHB when they start their pension.  

Real-Life Example:

Sarah, a federal employee, decides to leave federal service at the age of 50 with 7 years of service due to personal reasons. She doesn’t qualify for an immediate retirement of any kind, so she opts for a deferred retirement. She can then claim her retirement pension once she turns 62. But she cannot get back on the FEHB plan. 

Impact on Federal Retirement Benefits:

Postponed Federal Retirement:

By choosing to postpone your retirement, you can potentially increase your retirement annuity by avoiding the early penalties. You may still be eligible for certain benefits, such as the Federal Employees Health Benefits (FEHB) program and the Federal Employees Group Life Insurance (FEGLI) program.

Deferred Federal Retirement:

With deferred retirement, you can stop working as a federal employee before you are eligible for a pension. Then, once you are 62, you can start to collect your annuity based on the years that you did work, but will not be able to participate in the FEHB or FEGLI. 

Determining Eligibility:

To determine your eligibility for either postponed or deferred federal retirement, consider the following factors:

- Age and Service: Check if you have reached your MRA or if you have accumulated the required service credit for deferred retirement.

- Leaving Federal Service: Assess whether you will be separating from federal service before or after reaching your MRA.

- Benefit Calculations: Understand how your retirement annuity and other benefits may be affected based on your chosen retirement option.


In summary, postponed federal retirement and deferred federal retirement are two distinct options available to federal employees who are nearing retirement. By understanding the difference between postponed and deferred federal retirement, you can make an informed choice that aligns with your long-term financial goals and retirement plans. Remember to consult with your agency's retirement office or a financial advisor who specializes in federal retirement benefits to ensure you make the best decision for your unique situation.

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