Answering Your Common Questions About Federal Retirement
Retirement from a federal job comes with a host of benefits and considerations that differ significantly from the private sector. As you approach this significant phase in your life, you likely have several questions about how to navigate the process smoothly and ensure financial stability. Here, we address some of the most common questions about federal retirement.
What Are the Retirement Systems for Federal Employees?
Federal employees are generally covered under one of two retirement systems: the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). CSRS was established in 1920 and applies to employees who began their federal service before 1984. FERS, introduced in 1987, covers employees who started their service after 1983. The choice of system affects your pension benefits, contributions, and eligibility criteria.
How Do I Calculate My Pension Benefits?
For CSRS employees, the pension is calculated based on years of service and the highest average salary over any consecutive three-year period. Typically, the formula is 1.5% of this average salary for each of the first five years of service, 1.75% for the next five, and 2% for each year thereafter.
Under FERS, the calculation is simpler. It’s generally 1% of the high-3 average salary multiplied by years of service. For those who retire at age 62 or later with at least 20 years of service, the multiplier increases to 1.1%.
What Are the Requirements for Retirement Eligibility?
Eligibility for retirement under CSRS and FERS depends on your age and the number of years of service. Under CSRS, you can retire at age 55 with 30 years of service, at 60 with 20, or at 62 with 5. For FERS, you can retire at your minimum retirement age (MRA) with 30 years of service, at 60 with 20, or at 62 with 5. The MRA varies from 55 to 57, depending on your year of birth.
Can I Continue Health and Life Insurance into Retirement?
Yes, federal retirees can continue their health benefits (FEHB) and life insurance (FEGLI), provided they meet certain conditions. You must have been enrolled in these programs for the five years immediately before retirement or from your earliest opportunity to enroll.
What About Social Security and Thrift Savings Plan Benefits?
FERS employees contribute to Social Security and are eligible for benefits, which complement their FERS annuity and Thrift Savings Plan (TSP) distributions. The TSP functions like a 401(k), allowing you to contribute a portion of your income tax-deferred and receive matching contributions from the government up to a certain limit.
Watch the video above to learn more or get in touch with Serving Those Who Serve today! .
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