Up until age 62, a Federal Disability Retirement annuity is paid at 40% of the high-3 average salary. At 62, OPM automatically recalculates the annuity using the standard FERS formula, based on creditable years of federal service. For most retirees, that recalculated amount ends up lower than what they were previously receiving, though Social Security eligibility also begins at 62.
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If you're on Federal Disability Retirement, age 62 is probably the most important financial milestone you'll hit. It's when the rules around your annuity change in a pretty significant way, and a lot of people aren't prepared for it.
Up until age 62, you've been receiving 40% of your high-three average salary. At 62, the OPM automatically recalculates your annuity at the regular retirement rate. They look at your creditable years of federal service, including the time you spend on Disability Retirement, and run it through the standard FERS formula. For most people, that new number ends up being lower than what you were receiving.
The good news is that age 62 is also when you become eligible to start collecting Social Security, which can help offset that shift. Knowing what your income will look like before and after 62, so you're not caught off guard when it happens.
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