Deferred vs Postponed Retirement

How this is calculated

Two different retirements share one name in conversation and are constantly swapped for each other. They are not interchangeable, and the difference is worth more than the annuity arithmetic on this page.

Which one you have is settled on your last day

The test is whether you were entitled to retire at the moment you separated:

• Postponed. You reached your Minimum Retirement Age with at least 10 years of service, so 5 U.S.C. § 8412(g) entitled you to an immediate annuity. You may take it at once and accept the reduction, or elect to postpone its commencing date under 5 CFR 842.204(c).
• Deferred. You left before that point with at least 5 years of creditable civilian service. 5 U.S.C. § 8413(a) makes the annuity payable at 62; § 8413(b)(1) lets anyone with 10years elect an earlier date, which “may not precede” their MRA and “must precede” their 62nd birthday.

Nothing after separation moves you between them. A month of service short of the MRA is not made up by waiting, and the high-3 is frozen at the salary you were earning when you left.

The reduction, and the word the whole page turns on

reduction = 5/12 of 1% × full months by which the commencement date precedes the 62nd birthday

5 U.S.C. § 8415(h)(1) applies the same 5%-a-year reduction to both paths, and it measures from the day the annuity starts rather than the day you left. That single word is what makes postponing worth anything: the years between are not lost time, they are reduction being bought back at 5% a year.

Where the reduction disappears entirely

§ 8415(h)(2) is the part that most summaries omit. The reduction does not apply at all if, on the commencing date, you would satisfy the age and service requirements of certain immediate-retirement rules — tested at the age you will be then, against the service you already have:

• age 60 with 20 years — 5 U.S.C. § 8412(b). Reach it on the day the annuity starts and the reduction is removed, not reduced.
• MRA with 30 years — 5 U.S.C. § 8412(a). Reach it on the day the annuity starts and the reduction is removed, not reduced.

This is a cliff, and it produces the two results people find hardest to believe. Someone who separates with 20 years is reduced 10.42% starting at 59 years 11 months and nothing at all starting at 60. Someone who separates at 45 with 30 years can start at their MRA with no reduction whatsoever, years before anyone else can. The tool finds that date for you and marks it.

Sick leave: credited on one path, thrown away on the other

5 U.S.C. § 8415(m)(2)(A) credits unused sick leave to “the total service of an employee who retires on an immediate annuity”. A postponed annuity is an immediate annuity whose commencing date has been moved, so the balance counts. A deferred annuity is not one, so it does not — every hour is forfeited without payment. The calculator prices what that costs rather than merely warning about it, and the sick leave converter does the chart lookup in full.

The insurance, which is usually the larger number

5 U.S.C. § 8905(b) lets “an annuitant who at the time he becomes an annuitant was enrolled” in FEHB continue that enrolment, given five years of coverage before retirement. Read it against the two paths and the outcome follows on its own:

• Postponed.The annuity is still an immediate one, so coverage is reinstated on its commencing date. You are uninsured through this program in the gap, which is the real cost of postponing — not the paperwork.
• Deferred. Your enrolment ended at separation. By the time you become an annuitant there is nothing to continue, and no later event restores it. FEGLI follows the same rule.

For an employee a few months short of their MRA, that asymmetry is normally worth more than every figure in the table above. Check the date with the eligibility date finder before deciding when to leave.

What this does not model

• The 1.1% factor. Not an omission — it is unreachable. § 8415(i) tests age “at the time of the separation”, and anyone separating at 62 with 5 years is retiring outright rather than deferring. Both paths compute at 1%.
• The FERS annuity supplement. Neither path pays one, including a postponed annuity claimed before 62. See the supplement calculator for who does.
• The survivor election and its reduction. Available on both paths, elected when you apply rather than when you leave. The FERS annuity calculator prices it.
• Refunded service and deposits. If you took a refund of contributions, or have unpaid non-deduction or military service, your creditable service is not what your records appear to show. Enter service you know is fully creditable.
• Special provisions and disability. Covered service under § 8412(d) or (e) has its own rules; see the special provisions calculator. Disability retirement is a separate computation entirely.
• Cost-of-living adjustments, tax and premiums.Every figure is a starting gross annuity in today’s dollars. FERS COLAs do not begin until 62 on either path, so an annuity deferred for fifteen years starts at a figure fixed fifteen years earlier.

Sources

• 5 U.S.C. § 8413 — the deferred annuity: 5 years payable at 62, and the § 8413(b)(1) election of an earlier commencing date.
• 5 U.S.C. § 8415(h) — the 5%-a-year reduction measured from the commencement date, and the combinations at (h)(2) that remove it outright.
• 5 U.S.C. § 8412 — the immediate-retirement combinations, including § 8412(g) (MRA+10) and the § 8412(a) and (b) rules that (h)(2) tests against.
• 5 CFR 842.204 — the postponement election itself, and the 90-day window for filing it.
• 5 U.S.C. § 8905(b) — FEHB continuation into retirement, and the enrolment test that decides the two paths differently.
• OPM CSRS/FERS Handbook, Chapter 42 — MRA+10 Retirement (FERS) (PDF) — OPM’s own treatment of the postponed annuity and the benefits that follow it.

Last reviewed: August 2026