Reg Jones Expert's View

Last week we considered three questions that are essential when you sit down to figure out what your annuity will be when you retire: What is your high-3? What is basic pay? Why is your high-3 important? (See, Figuring out your Annuity: High 3)

This time let’s put the answers to work by showing you how to compute your own annuity.

However, before getting started on the calculations, you need to find out when you’ll be eligible to retire. And the rules are different for CSRS and FERS.

CSRS rules

To be eligible to retire on an immediate annuity, you must meet one of three age and service criteria: age 62 with 5 years of service, age 60 with 20 years of service or age 55 years with 30 years of service. However, if your agency is undergoing a major reorganization or reduction in force and you receive written notice that it will affect you, you may be offered optional early retirement at age 50 with 20 years of service or at any age with 25. Regardless of which category you fall into, the formula used to compute your annuity will be the same:

1.5 percent x your high-3 x 5 years of service, plus

1.75 percent x your high-3 x 5 years of service, plus

2 percent x your high-3 x all remaining years of service

FERS rules

To be eligible to retire on an immediate annuity, you must meet one of four age and service criteria: age 62 with 5 years of service, age 60 with 20 years of service, at your minimum retirement age (MRA) with 30 years of service or at your MRA with as few as 10 years of service. (MRAs range from 55 to 57, depending on your year of birth; currently it’s 56.) The same rules apply regarding early retirement as described above. Regardless of which category you fall into, the formula used to compute your annuity will be the same:

1 percent x your high-3 x all years of service or

1.1 percent x your high-3 x all years of service if you retire at age 62 or later with at least 20 years of service

Note: If you retire under the MRA+10 provision, your annuity will be reduced by 5 percent for every year (5/12 of 1 percent per month) that you are under age 62. You can reduce or eliminate that penalty by deferring the receipt of your annuity to a later date.

See also, Calculating a Federal Annuity for FERS and CSRS, or Federal Annuity Calculation for LEOs and Firefighters at ask.FEDweek.com