Calculating Your FERS Retirement Pension

The prospect of retirement and all the planning that goes into it can be daunting. After all, almost no one does something more than once before considering themselves an expert. However, there’s no need to overcomplicate things when it comes to retirement preparation, and understanding your FERS Pension is a fantastic place to start.

And thankfully, the computation is relatively straightforward.

FERS Pension Calculation Made Simple

You can estimate your FERS pension using this quick and straightforward procedure. To calculate your FERS retirement pension, you’ll need to consider a few different factors:

1. Your Years of Creditable Service: Your FERS pension is based on the number of years you’ve worked in a position covered by the FERS system. 

2. Your High-3 Average Salary: Your FERS pension is also based on your highest average salary over any consecutive 3-year period of your career (also known as your “High-3” average salary).

For instance, if you earned $95k, $105k, and $100k over the previous three years, your High-3 would be 100k (the average).

3. Your Retirement Factor: Your FERS pension is calculated by multiplying your years of creditable service by a “retirement factor” corresponding to your age at the time of retirement. The retirement factor is determined by a percentage set by the Office of Personnel Management (OPM).

4. The formula: To calculate your FERS pension, you’ll need to use the following formula: (High-3 Average Salary) x (Retirement Factor) x (Years of Creditable Service) = Monthly Pension Benefit

FERS Pension Calculation Made Simple

You can estimate your FERS pension using this quick and straightforward procedure.

For example, suppose your High-3 average salary is $100,000 while your retirement factor and creditable service are 1% and 30 years, respectively. Then, your FERS pension would be calculated as follows: (100,000) x (1%) x (25) = $25,000 Gross Annual Pension.

Most federal employees receive a wage increase of 1% of their High-3 salary for each year of service.

This rule does have one exception in any case. You receive 1.1% of your High-3 for each year of service if you retire at age 62 or later and have 20+ years of service (a 10% rise!).

So, assuming you matched that requirement, your pension would be ($100,000) x (1.1%) x (25) = $27,500 Gross Annual Pension, using the same numbers as in the previous example.

Act Immediately!

Do the calculations for your numbers right now if you haven’t already! I do mean at this very moment. Having an idea is preferable to having none, as this is the first step toward retirement planning. The formula for calculating a pension is very straightforward. Simple addition and subtraction are all that is required.

Contact Information:
Email: [email protected]
Phone: 8139269909

Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.

We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.

Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.