Expert's View

A federal retirement annuity. Think of it as the gift that keeps on giving. But how much is it really worth? Let’s look at the numbers. Because it’s based on your highest three consecutive years of average salary, a federal retirement annuity can be very impressive, especially if you are covered by CSRS, where you contribute more to the retirement fund than do FERS employees. To receive an annuity that is 56.25 percent of your high-3, all you have to have is 30 years of service and be at least 55 years old. And each additional year of service is worth 2 percent more.

Let me illustrate. If you were a CSRS employee who had 30 years of service at age 55 and kept on working until age 62, you’d have 37 years of service and be entitled to 70.25 of your high-3. And the longer you worked beyond that, the higher that percentage would be until you hit an 80 percent cap at 41 years and 11 months. However, you can exceed that cap if you have any unused sick leave. It will be added to your earned years of service and used in the computation of your annuity.


If you were a FERS employee age 62 with 37 years of service, the picture is different because you contribute less to the retirement fund. You would receive an annuity worth 40.7 percent of your high-3. However, if you retired before age 62 with the same years of service, your annuity percentage would only be 37 percent. That’s because those FERS employees retiring earlier than age 62 have their high-3 multiplied by 1 percent, whereas those retiring at age 62 or older with at least 20 years of service have theirs multiplied by 1.1 percent. Unfortunately, when it created FERS, the Congress declined to give any credit for unused sick leave.

As a FERS retiree, you also would be eligible for a Social Security benefit, which is much more difficult to figure. For an estimate of its value, consult the annual estimate you get from SSA. You also can request one through a local SSA office or through

Under either retirement system, you are guaranteed a pretty good annuity. But it’s even better than you might realize. First, your annuity isn’t based on the amount of money you and your agency contributed to the retirement system. If that were the case, your account would run dry a few years after you retired. Second, your annuity is increased by annual cost-of-living-adjustments (COLAs), a benefit that’s almost unheard of in the private sector. Note: The COLA rules for CSRS and FERS employees are different; but that’s a topic for another article.

For a quick comparison of how much money you’d have to set aside to pay for the annuity you expect to get when you retire, just go to the Thrift Savings Plan website at, click on the word Calculator then click on Annuity. Fill in the blanks with some numbers of your choosing and you’ll see that it takes a lot of money to get the returns you will get from your annuity – a whole lot more than you contributed.