Your FERS Annuity Is Worth More Than You Think

How much is your FERS annuity worth? More than you think it is! FERS is a defined benefit plan that is funded by mandatory contributions from both you and the government. You pay significantly less for this benefit than does Uncle Sam. Your FERS annuity is calculated by your length of service (in years and months) and your high-three annual salary. Those who retire under the age of 62 will receive an annuity based on 1% per year, while those who retire at or older than 62 and have at least 20 years of service will receive an annuity based on 1.1% per year. Those who are 62 or older but have less than 20 years get the 1% factor. Special category employees (e.g., law enforcement officers, firefighters, air traffic controllers, etc.) will receive a higher percentage.

How much would you have had to save on your own to get a benefit that is equal to what you have will receive in your FERS annuity? Quite a bit! Let’s say that you retire under the age of 62 and have a total of 30 years of federal service. Your high three salary is an even $100,000 a year. Your FERS annuity will be $30,000 per year and will (once you reach 62) have a cost of living adjustment. The COLA kicks in upon retirement for special category employees. How much would you have had to save in order to be able to generate an inflation indexed income of $30,000 per year? Click HERE to read more.