Check out the full article here:
Make an Appointment here:
How To Calculate Your FERS Pension
Every pay period, the government takes out a very small portion of your pay to go to your pension. However, the amount you receive from your pension is not based on how much you contributed over your career. It is based on the following three things:
Your High-3 Salary
Years of (creditable) Service
Your Pension Multiplier
Although this formula is simple, it gets complicated when calculating your High-3 salary and knowing what actually counts towards credible years of service.For more info, click here for my free training on “example”.
Gross Vs. Net Pension
One thing that is critical when planning your retirement is calculating your net pension and not just your gross. Your net pension is the actual dollar amount that you will receive each month. To do this calculation you have to include all the reductions to your pension. There can be as much as 7 different reductions to your pension! Click here to learn what 7 reductions could be and how they will affect your retirement….(read more)
LEARN MORE ABOUT: Retirement Pension Plans
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
As a government employee, you may be eligible for the Federal Employees Retirement System (FERS) pension when you retire. It is important to understand how to calculate your potential pension so you can adequately plan for your future. Here are the steps to follow:
Step 1: Determine Your High-3 Salary
Your FERS pension is based on your “High-3” average salary, which is calculated based on your highest three years of pay. To determine your High-3 salary, add up your highest three years of basic pay, and then divide that number by three. Basic pay does not include bonuses, overtime, or any other additional compensation.
For example, if your salaries over the last three years are $60,000, $65,000, and $70,000, your High-3 salary will be $65,000.
Step 2: Calculate Your Years of Service
Your FERS pension is also based on your years of creditable service. Creditable service includes all service with the federal government, including part-time work. To calculate your years of service, you can submit a request to your agency’s Personnel Office, or you can calculate the number of years and months yourself.
For example, if you have 20 years and 6 months of service, your creditable service will be 20.5 years.
Step 3: Determine Your Pension Benefit
To calculate your FERS pension benefit, use the following formula:
Pension Benefit = (High-3 Salary x 1% x Years of Creditable Service) + (High-3 Salary x 1.1% x Years of Creditable Service above 20)
For example, if your High-3 salary is $65,000 and you have 20.5 years of creditable service, your pension benefit will be:
Pension Benefit = ($65,000 x 1% x 20.5) + ($65,000 x 1.1% x 0.5)
Pension Benefit = $13,325 + $357.50
Pension Benefit = $13,682.50 per year
Step 4: Account for Cost-of-Living Adjustments (COLAs) and Survivor Benefits
Your FERS pension benefit will include annual COLAs to help keep pace with inflation. The amount of the COLA each year is based on the Consumer Price Index and is subject to change.
You may also choose to have a survivor benefit, which will pay a portion of your pension to your surviving spouse or beneficiary after you pass away. The cost of this benefit will depend on the level of benefit you choose.
In conclusion, calculating your FERS pension can be a complex process, but it is important to understand how it works so you can plan for your retirement. Knowing your High-3 salary, years of service, and possible COLAs and survivor benefits can help you estimate your pension and plan for the future.
I'm looking at my MIL's pension statement from the OPM. It shows (average high 3 salary) X 0.011 multiplier X (years and months of service). This all makes perfect sense, to this point. But the kicker is the fourth line in the formula then shows X 0.99 with no explanation or footnote (reducing her benefits by 0.01). Anybody have any idea what the 0.99 is?
I have a co worker that's getting ready to retire soon, I believe she worked for more than 35 years of federal service. My understanding is they calculate her FERS pension by calculating her 3 highest earning yers and 1.1% of that times the number of years you worked for federal service, MY QUESTION IS is there a cap to the number of years you've worked you can add ? I believe my co worker is being told there is since she worked over 35 years I believe close to 40yrs and I believe all 40 years aren;t being added to her calculation. Can you please clarify?
OMG! Every video (yours and others like you) that show how to calculate FERS retirement gives an exact number for credible number of years worked. What about those with 20 years and five months. It isn't calculated at 20.5. Or how about 21 years , 7 months. or 22 years and 11 months? Come on. How does OPM convert a 12 month calendar into a 10-point calculation?
Are additional months of service beyond a last year of service credited proportionately in the calculation?
Does the gov adjust the money earned for inflation assuming someone quit the gov service prior to being eligible for retirement but has over 5 years service?
GS 11 in 1997 was about 41K which is 75K in todays dollars.
Would I use the abs value of 41K or do I use and the adjusted to todays dollars to calculate my pension?
Im a AF DoD GS-12 (with the locality pay) I make ~85k/yr, I have 12 yrs of service…
are you saying I need to multiply 85000 x 12 x 1 ? = 1,020,000 ?!
and do they reduce my retirement age from 60 to 48 ? (60 – 12 = 48)
So if I know my high three average is, for example, $80,000 and I have exactly 20 years in, then what does the calculation look like? $80,000 X .011 X RSCD ——– What is the number I fill in for RSCD? Is it number of months (240)? In that case, I get 211,220. What does that number mean? An example calculation would have been really helpful.
So if COLA is not included in high three calculations, what does that mean? Is your base pay then whatever it would have been if there had been no cost of living adjustments since you started your federal career? Or is it that just the COLAs from subsequent years you may have worked after your high three do not count? To clarify my question–this is confusing because you say base salary is included in the calculation but COLA is not. But doesn't COLA become a part of base salary?
this is great but can you do a rate-of-return video because is it worth using the FERS-FRAE pension of 4.4% contribution yearly…..what salary does that make sense?
Is the "High 3" the sum or average of the highest 3 paying years?
What if I want to retire at age of 50 with 20yrs if service? What age can I get pension and what percentage of high 3?
I have co-workers who have been eligible for years. But, when you are making so much money in overtime, it is just not worth leaving that 6 figure income.
High Three x years x .010 or .011
Is this per year or month?