Are you trying to understand how much your FERS Annuity will be when you retire? This video is going to break down how the FERS pension works and provides an example!…(read more)

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How To Calculate Your Federal Pension – FERS

Planning for retirement is an essential part of financial security, and for federal employees, understanding the pension system is a critical aspect of retirement planning. The Federal Employees Retirement System (FERS) provides retirement benefits to federal employees, including a pension based on a formula that takes into account years of service and average salary. Understanding how to calculate your federal pension under FERS is key to ensuring a secure retirement.

To calculate your federal pension under FERS, you will need to consider three main factors: years of service, average salary, and the pension formula.

First, consider your years of service. The FERS pension is based on the number of years you have worked for the federal government. The longer you have worked, the higher your pension will be. For FERS, the pension calculation is based on the following:

– 1% of your high-3 average salary for each year of service if you retire at age 62 or older with at least 20 years of service.
– 1% of your high-3 average salary for each year of service if you retire at your minimum retirement age (MRA) with at least 30 years of service.
– 1% of your high-3 average salary for each year of service if you retire earlier than your MRA (with the percentage reduced for each year you are under your MRA).

Next, calculate your average salary. The high-3 average salary is the highest average basic pay you earned during any consecutive 3-year period while employed by the federal government. This includes your basic salary, as well as any special pay, differentials, and premium pay. This number is used to calculate your pension benefit.

Finally, use the pension formula to calculate your federal pension. Once you have determined your years of service and average salary, you can use the formula to calculate your pension benefit. For example, if you have worked for the federal government for 30 years and your high-3 average salary is $80,000, your pension would be calculated as follows:

30 (years of service) x 1% = 30%
30% x $80,000 = $24,000 per year

In this example, your annual pension benefit would be $24,000.

It’s important to note that these calculations are a simplified example, and the actual calculation may be more complex due to factors such as unused sick leave, part-time service, and certain types of service credit. Additionally, there are other benefits available under FERS, such as the Thrift Savings Plan and Social Security. It’s important to consider all of these factors when planning for retirement.

In summary, understanding how to calculate your federal pension under FERS is an essential part of retirement planning for federal employees. By considering your years of service, average salary, and the pension formula, you can determine your pension benefit and make informed decisions about your retirement. Consulting with a financial advisor or retirement specialist can also help ensure that you are maximizing your retirement benefits and planning for a secure future.