How do I calculate my high three? I was a FERS employee from 1991-2000 then returned to FERS in 2022. I am 58 with a total of 23 years of credible FERS retirement because I did a military buy back of my active duty time (I retired from the Army Reserve). I know I will be giving up my SRS, but I plan to quit working after 24 months in July 2024. Is my high three calculated based on the last 24 months and the highest 12 months from my previous FERS time back in the 1990s? Thank you so much. – Rich
Federal employees have several options when planning for retirement. Your high-3 salary is very important for figuring out your federal pension. It’s the highest average basic pay you earned over any 36 months in a row while working for the government. Knowing how this works can help you plan better for when you retire.
How Your High-3 is Calculated
Your high-3 is based on the 36 months consecutive months when you made the most money in your federal job. Here are some key points:
- Only the time you worked for the government counts
- The calculation looks for the highest-paid 36 months, even if they’re in different years or jobs
- Extra pay for where you work (locality pay) is included, but bonuses and overtime pay are generally not included
Example: High-3 Calculation After a Break in Service
Let’s look at Rich’s case. He worked for the government from 1991 to 2000, then came back in 2022. Since pay is usually higher now than in the 1990s, his high-3 will probably come from his recent work. The calculation doesn’t count the time he didn’t work for the government.
Maximizing Your High-3
Some people move to places where they can get paid more for their last few years of work. This can make their pension bigger, but it’s important to think carefully about whether this is a good idea for you.
Planning for Retirement
Understanding how your high-3 salary affects your pension is important for planning your money for retirement. If you have questions, it might be a good idea to talk to someone who knows a lot about federal benefits.
ABOUT THE AUTHOR
Micah Shilanski, CFP®, is a distinguished financial planner known for his deep commitment to providing exceptional advisory services to his clients. As the founder of Plan Your Federal Retirement, Micah has dedicated his career to helping federal employees understand and optimize their benefits to ensure a secure and prosperous retirement. His expertise is widely recognized in the industry, making him a sought-after speaker and educator on financial planning and retirement strategies.
Micah’s approach is client-centered, focusing on creating personalized strategies that address each individual’s unique needs. His work emphasizes the importance of comprehensive planning, incorporating aspects of tax strategy, investment management, and risk assessment to guide clients toward achieving their financial goals.