The Federal Employees Retirement System (FERS) is a three-tiered program comprising Social Security, Basic Annuity, and the Thrift Savings Plan (TSP). To understand your benefits and maximize your retirement income, it’s crucial to know how to calculate your FERS retirement. In this article, we will walk you through a step-by-step example for calculating FERS retirement benefits.

Step 1: Determine Your Eligibility

Before you can calculate your FERS retirement benefits, you must first ensure that you are eligible for retirement under FERS rules. Eligibility depends on your age and years of service:

– Immediate/Optional Retirement: Minimum Retirement Age (MRA) with at least 30 years of service; Age 60 with at least 20 years of service; or Age 62 with at least 5 years of service.

– Early Retirement (voluntary or involuntary): Age 50 with at least 20 years of service; or any age with at least 25 years of service.

– Deferred Retirement: MRA with at least 10 years of service but less than 30 years of service. Benefits start when you reach age 62.

Step 2: Calculate Your High-3 Average Salary

To calculate your Basic Annuity under FERS, you need to determine your High-3 Average Salary. This refers to the highest average annual pay earned during any consecutive three-year period in your career. Typically, this is during the last three working years before retirement.

Step 3: Calculate Your Years of Creditable Service

Determine your total number of years and months served as a federal employee under FERS. If you have seasonal or part-time employment, account for working hours when determining the length of creditable service. Exclude any unused sick leave.

Step 4: Calculate Your Basic Annuity

Use the following formula, based on your years of creditable service, to calculate your Basic Annuity:

– For the first five years: 1% x High-3 Average Salary x number of years

– For years 6 to 10: 1.5% x High-3 Average Salary x number of years

– For years 11 to 20: 2% x High-3 Average Salary x number of years

– For each year beyond 20: 3.5% x High-3 Average Salary x number of years

Sum up the calculations from all segments of service to obtain your Basic Annuity annual rate. If you retire at age 62 or older with at least 20 years of service, use 1.1% instead of 1% for the first five years.

Step 5: Estimate Your Social Security Benefits

Your FERS benefits include Social Security payments, which you can estimate using the Social Security Administration’s online calculator or by reviewing your Social Security statement.

Step 6: Calculate Your Thrift Savings Plan (TSP) Benefits

Your TSP is a retirement savings and investment plan that allows you to contribute a portion of your income over time. Use the TSP’s online calculators or consult with a financial professional to estimate your TSP balance at retirement and the potential income it could generate.

In conclusion, calculating FERS retirement can serve as a useful tool in planning your post-career life. Understanding the nuances of eligibility, annuity calculation, and factoring in Social Security and TSP benefits will help ensure you make informed decisions regarding your federal retirement planning.