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FERS Retirement Benefits 101: What Federal Employees Need to Know
If you are a federal employee, it’s important to understand the retirement benefits available to you through the Federal Employees Retirement System (FERS). FERS provides a comprehensive retirement package that includes a pension, Social Security benefits, and a Thrift Savings Plan (TSP). Here’s what you need to know about FERS retirement benefits.
Pension: FERS provides a defined benefit pension based on your years of service and highest three consecutive years of average pay. The pension formula is 1% of your high-3 average pay multiplied by your years of service. For example, if you have 30 years of service and a high-3 average pay of $60,000, your annual pension would be $18,000 (1% x 30 years x $60,000).
Social Security: In addition to your FERS pension, you will also be eligible for Social Security benefits. These benefits are based on your earnings history and are calculated using a formula that takes into account your highest 35 years of earnings.
Thrift Savings Plan (TSP): The TSP is a retirement savings plan for federal employees, similar to a 401(k) plan in the private sector. You can contribute up to the IRS annual limit, and the government will provide matching contributions up to a certain percentage of your salary.
In addition to these core benefits, FERS also provides disability and survivor benefits to eligible employees and their families.
When can you retire? The minimum retirement age for most FERS employees is 55, with at least 30 years of service, or 60 with at least 20 years of service. If you retire before the age of 62, your FERS pension will be reduced by 5% for each year that you are under the age of 62.
You can also retire under the FERS Special Retirement Supplement if you retire before the age of 62 and are eligible for an immediate, unreduced annuity. The Supplement is designed to bridge the gap between your retirement date and the age at which you become eligible for Social Security benefits.
Understanding your FERS retirement benefits is crucial to planning for your future. If you are a federal employee, be sure to familiarize yourself with the details of your FERS benefits and consult with a financial advisor to ensure that you are making the most of the retirement options available to you. Your retirement is an important milestone, and it’s important to make informed decisions about your financial future.
Do you work by the hour? I just want a review of my financial plan. I do not want to pay an absurd AUM fee.
Hi just retired last month October 31st, this year and 60 yrs.old had less than 15 years of service, am I eligible to get the Supplemental. Thank you
I'm struggling in this market. Stocks that I have held for months and made profits from are not behaving the way I'm used to so I’m quite indecisive on how to tackle this market, any advice would be grateful.
I'm not kidding when I say that the market crash and high inflation have me really stressed out and
worried about retirement. I've been in the red for a while now and although people say these crisis has it
perks, I'm losing my mind but I get it Investing is a long-term game, so focus on the long run.
Is dental and vision insurance enough in the last five years of service before retirement. Or do I need to enroll in a blue cross or similar program.
Unfortunately those entering the country illegally paid nothing into social security and are receiving full benefits while were told it's going broke by 2030. Wish I was CSRS, they had a much better retirement.
Hi Dallen – I have been enjoying your videos lately, since I'll be retiring at the end of this month. I was wondering if you could address the issue of Social Security overpayment. I saw some recent videos on this, where many people (retired or otherwise collecting SS benefits) were sent letters from SSA telling them they were overpaid in some cases $30,000 to $50,000 and were given 30 days to pay it back. That is concerning, especially when the SSA is not accepting the responsibility for the errors. How does one figure out if they are being overpaid? Thanks again for the great videos!
Imagine being hired January 1, 2013 and having to contribute 3.1% towards pension instead of .8% if you had been hired one day earlier…
Great overview