Rule of 85 Retirement: Early Retirement Eligibility Explained

If you work for a company or government agency that offers a defined-benefit pension plan, there might be a provision in the plan rules allowing you to retire early and still qualify for full benefits. Some pension plans use what's called the "Rule of 85" to determine eligibility for early retirement for those who have been with the same employer a long time.

What Is the Rule of 85?

To calculate the rule of 85, companies take your age and add it to your years of service. If those numbers add up to 85, you are eligible for early retirement. For example, a 55-year-old with 30 years of service would meet the standards of the rule of 85, because her age plus her years of service equals 85.

Considerations

"Rule" of 85 is a misnomer. While some public pensions may use this standard, for most pension plans it is a guideline and is used in different ways. For example, companies may have a minimum retirement age, such as 60, meaning you can't retire any earlier even if your age and service years add up to 85. Other pension plans may use a different combination of age and years of service, such as 80 or 90. If you are considering early retirement, check with your plan administrator or company human resources department to see how your pension will be affected.