When planning for retirement, United States Postal Service (USPS) employees face a unique set of considerations and benefits. Understanding these can help ensure a smooth transition from career to retirement. Here, we answer some of the most common questions USPS employees may have about their retirement.
What Retirement Plans Are Available to USPS Employees?
USPS employees have access to several retirement benefits. The primary plan is the Federal Employees Retirement System (FERS), which includes three components: the Basic Benefit Plan, Social Security, and the Thrift Savings Plan (TSP).
The Basic Benefit Plan functions as a defined benefit pension, funded by contributions from both the employee and the USPS. Social Security benefits are accrued as in any other employment, and the TSP is a tax-deferred savings plan similar to a 401(k), allowing employees to invest part of their salary with government matching up to a certain percentage.
How Is the Pension Under FERS Calculated?
The pension for USPS employees under FERS is calculated based on years of service and the average of the highest three years of salary, known as “high-3.” Generally, the formula used is 1% of the high-3 average salary multiplied by years of service. For those who retire at age 62 or older with at least 20 years of service, the multiplier increases to 1.1%.
When Can I Retire from the USPS?
The eligibility for retirement depends on your age and years of service. Immediate retirement benefits under FERS can be received if you are at least 62 years old with five years of service, 60 years old with 20 years of service, or at your minimum retirement age (MRA) with 30 years of service. The MRA varies between 55 and 57, depending on your birth year.
What Are the Benefits of Retiring Later?
Retiring later can significantly increase your pension and savings. By delaying retirement beyond your MRA, you can avoid early retirement reductions. Additionally, working longer allows you to contribute more to your TSP, potentially increasing your savings and benefiting from additional years of government matching.
Can I Withdraw from My TSP Before Retiring?
Yes, you can make withdrawals from your TSP after you turn 59½ years old, regardless of whether you’re still employed or not. However, withdrawing before age 59½ typically incurs a penalty, unless you meet specific conditions such as financial hardship.
What Happens to My Health Benefits When I Retire?
USPS employees can continue their Federal Employees Health Benefits (FEHB) into retirement, provided they have been enrolled in the program for the five years immediately before retiring or since their first opportunity to enroll. Retirees pay the same premiums as current employees.
How Do I Begin the Retirement Process?
To begin the retirement process, start by contacting the USPS Human Resources Shared Services Center. It’s recommended to start planning and initiating the process at least six months before your intended retirement date to ensure all paperwork and benefits are appropriately handled.
Watch the video above to learn more and get your USPS retirement questions answered! .
