Expert's View

No matter how hard the government shakes the early retirement and buyout trees, there are still a number of hardy souls who hang on. And these are the guys and gals who keep asking me if there’s a maximum amount of annuity they can get when they finally retire. Let’s find the answer.

Regardless of what retirement system you’re in, by law your earned annuity cannot exceed 80 percent of your highest three consecutive years of average salary, your “high-3.” Your earned annuity consists of all your years of creditable service. It begins with your service computation date – SCD – and ends when you retire. If you are a CSRS employee, you’d have to work for 41 years and 11 months to reach the 80 percent limit. Because of the smaller multiplier used in computing their annuities, FERS employees would have work as long as most people live – 72.7 years! So the 80 percent limit isn’t an issue for them. Therefore, FERS employees are free to stop reading now.


Quick thinking CSRS employees will be wondering if retirement deductions will be taken out of their salaries after they reach 41 years and 11 months of creditable service. The answer is yes. Deductions will continue to be taken out of your pay – and at the same rate. Nothing changes unless you have any unpaid deposits or redeposits to the retirement fund. In that case, the excess contributions usually will be applied toward them.

If you have made excess contributions, at retirement you will be given a choice. You can either receive all those excess contributions plus 3 percent interest compounded to the date you retire or you can use that money to buy additional annuity. The basic rule is that each $100 of excess contributions will buy $7 per year of additional annuity at age 55. However, that dollar amount increases by 20 cents for each year you are over 55 – and for those of you who have racked up 41 years and 11 months, this has some value. For example, if you retire at age 65, each $100 would buy you $9 per year of additional annuity; at 70, $10, etc. You can even elect to provide a survivor annuity with it.

Did somebody ask, “What happens to unused sick leave?” Good question. Unused sick leave will be added to your earned service credit and be used in the computation of your annuity. Therefore, the more unused sick leave you have to your credit when you retire, the higher your final annuity will be.