What is FERS retirement?
FERS is a three-tiered retirement system for federal employees hired after 1983. It consists of:
- FERS Basic Benefit Plan (Pension): A monthly annuity based on your high-3 average salary and years of service
- Social Security: Standard Social Security benefits you earn like any other worker
- Thrift Savings Plan (TSP): A 401(k)-style retirement savings account with government matching
FERS Pension Calculation Formula
Standard FERS: High-3 Average Salary × Years of Service × 1%
FERS at Age 62+: High-3 Average Salary × Years of Service × 1.1%
FERS Retirement Eligibility
- MRA + 30: Retire at Minimum Retirement Age (55-57) with 30 years of service
- Age 60 + 20: Retire at age 60 with 20 years of service
- Age 62 + 5: Retire at age 62 with 5 years of service
What is CSRS retirement?
CSRS covers federal employees hired before 1984. It provides a more generous pension but doesn't include Social Security (in most cases).
CSRS Pension Formula
- First 5 years: 1.5% per year
- Next 5 years (5-10): 1.75% per year
- Years 10+: 2% per year
CSRS Retirement Eligibility
- Age 55 + 30: Retire at age 55 with 30 years of service
- Age 60 + 20: Retire at age 60 with 20 years of service
- Age 62 + 5: Retire at age 62 with 5 years of service
Maximizing Your TSP
The TSP is the federal government's version of a 401(k). For FERS employees, the government matches up to 5% of your contributions.
TSP Contribution Matching (FERS)
- Automatic 1% agency contribution (even if you contribute 0%)
- First 3% you contribute: Matched dollar-for-dollar
- Next 2% you contribute: Matched at 50 cents on the dollar
- Total: Contribute 5% to get full 5% match
TSP Withdrawal Strategies in Retirement
- Leave funds in TSP and take periodic withdrawals
- Roll over to an IRA for more investment flexibility
- Purchase a TSP life annuity for guaranteed income
- Roll a portion into a fixed annuity for higher guaranteed rates
💡 Pro Tip: Many federal retirees roll a portion of their TSP into a fixed annuity to get guaranteed rates higher than the G Fund while maintaining other TSP funds for growth.
Understanding FEGLI in Retirement
FEGLI provides group term life insurance for federal employees. However, premiums increase significantly as you age, especially after retirement.
FEGLI Coverage Types
- Basic: Equal to your salary plus $2,000 (rounded up)
- Option A: Additional $10,000 of coverage
- Option B: Additional coverage in multiples of your salary (1-5x)
- Option C: Coverage for your family members
Common Retirement Strategies
- Keep Basic coverage with 75% or 50% reduction to lower premiums
- Drop Option B entirely (most expensive in retirement)
- Consider private life insurance as an alternative
- Use the FEGLI calculator to compare costs vs. benefits
Maintaining Health Coverage After Retirement
One of the most valuable federal benefits is the ability to continue FEHB coverage into retirement, often with the government continuing to pay a portion of your premiums.
Eligibility Requirements
To continue FEHB into retirement, you must:
- Retire on an immediate annuity (not deferred)
- Have been enrolled in FEHB for the 5 years immediately before retirement (or since first eligible if less than 5 years)
FEHB and Medicare
When you turn 65, you become eligible for Medicare. Most federal retirees keep both FEHB and Medicare Part B:
- FEHB and Medicare coordinate to provide comprehensive coverage
- Medicare typically pays first, FEHB pays second (lower out-of-pocket costs)
- You can delay Medicare Part B if you're still working with FEHB
- Medicare Part A is usually free; Part B has a premium (2026: ~$185/month)
Annual Cost of Living Adjustments
Federal retirees receive annual COLA increases to help their pensions keep pace with inflation.
FERS COLA Rules
- FERS retirees under age 62: No COLA
- FERS retirees age 62+: Full COLA if CPI increase is 2% or less
- If CPI is 2-3%: COLA is CPI minus 1%
- If CPI is over 3%: COLA is CPI minus 1%
CSRS COLA Rules
- CSRS retirees receive full COLA regardless of age
- COLA matches the CPI increase with no reduction
Guaranteed Income Options
Many federal retirees choose to supplement their FERS/CSRS pension and Social Security with additional guaranteed income from fixed annuities.
Why Federal Employees Choose Fixed Annuities
- Higher rates than TSP G Fund: Fixed annuities often offer 5-5.5% vs. G Fund's 3-4%
- Tax-deferred growth: Like TSP, earnings grow tax-free until withdrawal
- Principal protection: Your money is guaranteed and not subject to market risk
- Supplement FERS pension: Create additional guaranteed monthly income
Fixed Annuity vs. TSP Comparison
Fixed Annuity (MYGA)
- 5.0-5.5% guaranteed rate
- No market risk
- Tax-deferred growth
- 3-10 year terms
TSP G Fund
- 3.0-4.0% typical rate
- Government backed
- Tax-deferred growth
- Flexible withdrawals
When can federal employees retire?
FERS: MRA+30 (age 55-57 with 30 years), Age 60+20, or Age 62+5. CSRS: Age 55+30, Age 60+20, or Age 62+5. Special provisions exist for law enforcement and firefighters.
How is my FERS annuity calculated?
FERS pension = High-3 average salary × Years of service × 1% (or 1.1% if retiring at age 62+ with 20+ years). Use our calculator to get your exact estimate.
What happens to my FEHB when I retire?
You can continue FEHB coverage into retirement if you retire on an immediate annuity and were enrolled for the 5 years before retirement. The government continues paying a portion of your premium.
Should I keep my TSP or roll it over?
It depends on your needs. TSP has low fees and the safe G Fund. However, many retirees roll a portion into fixed annuities for higher guaranteed rates (5%+ vs G Fund's 3-4%) while keeping some in TSP for flexibility.
How do FERS and Social Security work together?
FERS employees pay into Social Security and receive full benefits. Your FERS pension and Social Security are separate - you get both. TSP is the third leg of the FERS "three-legged stool."
What is the FERS Supplement?
If you retire before age 62 under MRA+30 or Age 60+20, you may receive the FERS Special Retirement Supplement until age 62 (when you're eligible for Social Security). It approximates what your Social Security benefit would be.