Federal Retirement Experts logo

FERS Annuity Calculations

man with calculator

As a US Government employee under the Federal Employee Retirement System, or FERS, you have at least three income streams in your retirement: The Thrift Savings Program, Social Security, and your government pension annuity. Understanding the income streams from each is key to retirement planning. The formula for determining your annuity is:


1% (or 1.1%) x High-3 x Years in Service.


We’ll break each of these elements down to help you find an estimate of your annual annuity payments.


1% (or 1.1% at 62)

While the average retiree will calculate their annuity payments at 1%, employees can earn an extra .1% by retiring at or after age 62. This advantage makes a huge difference over time, and should be a major consideration when choosing your retirement date.


High-3

Your High-3 is your highest-earning three consecutive years in service to the Government. The High-3 is the most recent three years in service for many people, but if you have experienced a job change, your highest three salaries may be in the past.


Years in Service

Years in service may be reasonably straightforward, but it can be increased in a couple of ways. While you can’t apply unused sick time to your years of service to determine your minimum retirement age, you may use it for your annuity calculation. To do this, add on your accrued sick leave to your time in service in monthly increments.


If you’ve spent time in the military, you can also add those years to your years in service if you participate in the buy-back program. These additional hours will count toward your minimum retirement age, in addition to your annuity calculation.


Special Circumstances

If you choose to retire before the age of 60 with less than 20 years in service, the Government will reduce your annuity payments by 5% for each year under the age of 62. This fee can be waived if you are participating in an early-out program.


For those retiring before the age of 62, the Government will increase your annuity payment to cover the gap between your separation date and the time until you qualify for Social Security. This is called the FERS Supplement. This supplement will expire at age 62, at which time you are eligible to draw Social Security. The FERS Supplement and Social Security require the same standards of earnings. In 2022, this amount was $19,560 in income per year.


Conclusion

If this article has left you with any questions about your annuity calculations, or if you’d like to work on making an overall plan for your Federal retirement, don’t hesitate to get in touch with us for a completely free Federal Employee Benefits Report. Your benefits expert will work closely with you to ensure you get the most from your Federal retirement benefits.

More Featured Articles

End of federal pay period being circled by pencil
March 25, 2025
So, you've dedicated years of service to the federal government. Now, the prospect of retirement shimmers on the horizon, promising a life of leisure, travel, and pursuing passions long set aside. But before you say goodbye to the 9-to-5, there's a crucial decision to make: when exactly should you retire? While any day that marks your escape from the daily grind might seem like a good one, strategically choosing your retirement date can significantly impact your federal employee benefits, potentially adding thousands to your retirement income. This isn't just about picking a date that's convenient; it's about understanding the complex interplay of federal retirement rules and maximizing your hard-earned benefits.
thumbnail of Capital and U.S. Flag
December 6, 2024
Federal employees, especially those nearing retirement age, should be aware of potential changes that could impact their retirement benefits. While details are still emerging, a new Department of Government Efficiency (DOGE) is being discussed, which could have implications for federal operations and retirement benefits. According to recent reports, this new department aims to increase transparency and efficiency in government operations. However, the full scope and implications of this initiative remain unclear. As with any significant change in government structure, there may be unforeseen consequences that could affect various aspects of federal employment, including the Federal Employee Retirement System (FERS) benefits.
thumbnail of magnifying glass over money and calendar
November 15, 2024
Federal employees often ponder the critical question: "When can I retire and receive full benefits?" Understanding the eligibility criteria under the Federal Employees Retirement System (FERS) is essential for making informed retirement decisions.
thumbnail of money bridging gap
October 25, 2024
The Federal Employees Retirement System (FERS) Supplement, also known as the Special Retirement Supplement (SRS), is a valuable benefit for eligible federal employees who retire before age 62. However, many retirees are surprised to learn that this supplement is subject to an earnings test, which can reduce or eliminate the benefit based on post-retirement income. Understanding how this earnings test works is crucial for federal retirees planning their financial future.
premium hike thumbnail
October 9, 2024
Federal workers are bracing for a significant increase in their health insurance costs come 2025. The Office of Personnel Management (OPM) has announced that Federal Employees Health Benefits (FEHB) program premiums will rise by an average of 13.5% next year. This marks the largest increase in almost two decades and comes on the heels of already substantial hikes in recent years.
thumbnail image of retired woman holding social security check
September 25, 2024
Social Security benefits play a crucial role in the financial security of millions of Americans during retirement. However, navigating the complex system of rules and regulations surrounding Social Security can be challenging. This guide aims to help you understand the key aspects of Social Security and provide strategies to maximize your benefits.
thumbnail of a couple holding map together
August 30, 2024
Insights and Strategies for Federal Employees
image of couple with umbrella
August 5, 2024
So, what exactly is Indexed Universal Life (IUL) insurance? Well, it's a type of permanent life insurance that offers a cash value component in addition to a death benefit. Unlike traditional whole life insurance, which offers a fixed interest rate, IUL insurance allows policyholders to potentially earn returns based on the performance of a market index, such as the S&P 500. This means that your cash value has the opportunity to grow at a faster rate than with a traditional whole life policy. Pretty cool, right?
image of air traffic controller
July 19, 2024
What are the age and service requirements to retire from the federal government? Read this blog to understand the latest federal employee retirement requirements.
More Posts
Share by: