When we talk about your FERS Retirement, we’re really talking about several different benefits. FERS (Federal Employees Retirement System) has three main components:
Your FERS pension and Social Security will be fixed dollar amounts. But the money you get from your TSP will depend on how much you contributed and how well you managed the money.
As a FERS, you have a chance to take a more active role in managing your own retirement than CSRS do. But, that means you need to stay up-to-date on your benefits.
First – let’s talk about FERS Retirement eligibility rules. Then we’ll take a closer look at each leg of your FERS Retirement …
In order to retire under FERS – you must have reached a certain age and have enough years of creditable service.
What age? And how much creditable service? It depends on the type of retirement rules you go out under.
Your eligibility to retire depends on…
Ex: For a regular Immediate FERS Retirement, you must have reached your Minimum Retirement Age (MRA) and have at least 30 years of creditable service. But you could also qualify if you are at least age 60 at retirement with 20 years of service, or be at least age 62 with 5 years of service.
There are several different types of FERS Retirement, each with their own requirements of age and years in service.
Click here to take a closer look at the different eligibility rules for FERS retirement.
Sometimes people will call your FERS pension a FERS annuity. Even OPM calls it an annuity. But to avoid confusion with other annuities (ex: an annuity from TSP, or annuities from insurance companies) we’re going to be using the term pension when we talk about your FERS retirement.
Every pay period, the government takes out a small portion of your pay to put towards your FERS pension. For most FERS, it is 0.8% of your basic pay. But your pension is not based on this amount.
Your FERS pension is a defined benefit program. “Defined Benefit” means the amount you *get* is defined or fixed. It doesn’t matter how much money you contributed – the monthly income from your pension will be a fixed amount based on certain factors.
Once you retire, you can receive a basic monthly pension for the rest of your life.
In order to calculate your basic FERS retirement pension, you will need to know three things…
Your FERS pension is calculated by taking…
The calculation looks simple. But the complexity comes in how you calculate your High-3 Salary, and what really counts towards your Years of Creditable Service.
Click here to learn more about how each part of your pension formula is calculated and see examples of FERS pension calculations.
Planning with Gross monthly pension amount - but not calculating the Net.
To Avoid This Mistake: Take time to estimate your NET Pension
Once you calculate your gross pension – it’s important to look at your net number.
One of the most common mistakes I see federal employees make is that they plan based on their gross pension – not on the net.
They calculate their pension, but they forget to look at the amount that they’ll really ‘take home’ each month. Some will remember to factor in the cost of their FERS survivor annuity – but that’s just one reduction.
There may be as many as 7 reductions to your FERS pension! Click here to learn more about the reductions to your FERS pension.
Employees covered under the Federal Employee Retirement System (FERS) are typically eligible to receive Social Security benefits when they retire.
Every pay period, the Federal Government takes out 6.2% of your basic pay to put towards Social Security. But just like your FERS retirement pension, your Social Security benefit is not exactly based on your contributions – it is based on other factors.
The amount of Social Security you receive depends on the amount of money you’ve earned over the years and how long you have been working in a job that contributes to Social Security (most do).
The easiest place to find out how much you can expect to receive in Social Security used to be your Social Security Statement. But in recent years the Social Security Administration only mails statements to workers over age 60. If you do not have a paper statement, you can view your statement online. Go to Social Security’s website. You can create a mySocialSecurity account and view your statement online.
There is a special benefit for some FERS retiring before age 62. It’s called the Special Annuity Supplement, but more commonly known as the FERS Supplement.
Social Security is an important part of the FERS Retirement package – but what about FERS who retire before they could even draw Social Security?
The FERS Supplement is designed to help bridge the money gap for certain FERS who retire before age 62. It will supplement a portion of your missing Social Security income until you reach age 62. But not all FERS are eligible to receive the Supplement. Click here to learn more about the FERS Supplement.
The Thrift Savings Plan (TSP) is a special account for Federal Employees. The TSP was created as part of the Federal Employees Retirement System in 1986. Most government employees (FERS and CSRS) are eligible for the TSP – even those hired before it was created.
The TSP allows you to save pre-tax dollars in a special personal account. You can choose how to invest those dollars – although your choices are limited to the specific TSP funds.
With your FERS retirement pension and Social Security, you will receive fixed amounts. But with your TSP, the amount you receive depends on how much you put in and how well you managed the money.
Your TSP contributions are optional and separate from your FERS pension.
Many FERS are eligible for the TSP match – where the government and your agency contribute money to your TSP account.
As you know, the FERS retirement system is complex. And while your HR department is there to help, *YOU* are responsible for your retirement.
We seen the mistakes that people (and even some professionals!) can make, and we want to help you avoid them. Click the button below to learn more.
✗ Forgetting to check your beneficiary designations
✗ Expecting pension check to arrive in 30 days after retiring
✗ Not knowing the difference between SCD vs. RSCD
✗ Completing retirement paperwork incorrectly
✗ Failing to prepare financially for retirement
✗ Failing to understand tax consequences
✗ Getting bad advice
Click the button below and learn how to avoid these mistakes while planning YOUR retirement
“I am considering transferring/$10,000 from my TSP to my Roth account in Fidelity. Your presentation mentioned TSP to IRA to Roth. What’s the correct steps for my financial advisor?
“… I recently went over the max earnings on my supplement and when I filled the form out in early June it is expected I was appx 2,500 over.
Answering Retirement Questions If you have questions about your retirement from Federal Service, we can help! Our FERS Federal Fact Check for Federal Employees who work with the Department of
“I am retiring on 12/31 at the age of 56 – will my FERS Supplement calculation include 2019 earnings – after they get reported to Social Security. I know the
Get the most out of your federal retirement benefits by taking advantage of the FERS resources created by Micah Shilanski, CFP®, and the team of independent financial advisors at Shilanski & Associates, Inc. Join the thousands of federal employees who trust us to guide them in their retirement planning journey because of our unique perspective of how your FERS benefits contribute to your comprehensive financial plan.
Year after year I see Federal Employees missing the same critical concepts in their federal retirement planning. That’s why I’ve created an online workshop to help educate Federal Employees on these critical concepts.
Advisory services offered through Shilanski & Associates, Inc., an Investment Adviser doing business as “Plan Your Federal Retirement”. Plan Your Federal Retirement is not employed by the United States Federal Government and does not represent the United States Federal Government. All content on this site if for information purposes only. This website is not personalized investment advice. Securities investing involves risks, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful. Please review our Customer Relationship Summary (Form ADV Part 3) for important information about our services and fees.
Opinions expressed herein are solely those of Shilanski & Associates, Incorporated, unless otherwise specifically cited. Material presented is believed to be from reliable sources, and no representations are made by our firm as to other parties, informational accuracy, or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation.
Content provided herein is for informational purposes only and should not be used or construed as investment advice or recommendation regarding the purchase or sale of any security. There is no guarantee that any forward-looking statements or opinions provided will prove to be correct. Securities investing involves risk, including the potential loss of principle. There is no assurance that any investment plan or strategy will be successful.
7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.
7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.
