Reg Jones Expert's View

Yes, I know. Everyone who was eligible to retire and wanted to leave did so last year. So why am I writing about retirement now? It’s because there’s another wave of retiree-eligible employees whose opportunity to retire will come up this year.

If you are one of them, planning ahead will smooth your way. This series is designed to help you calculate your own annuity under the four most common career scenarios: all CSRS service, CSRS-Offset, all FERS, and mixed FERS and CSRS.

The Civil Service Retirement System is based on a formula that allows you to estimate what your annuity will be when you retire. The nearer you are to retirement, the more accurate your estimate will be. All you need to know is your “high-3” and your years of creditable service. Your high-3 is the average of your highest three consecutive years (78 bi-weekly pay periods, actually) of basic pay. Whether you will actually be eligible to retire depends on your age and years of service.

Under CSRS, you can retire immediately if you meet one of the following age and service thresholds: age 55 with 30 years of service, 60 with 20 or 62 with 5. You may also retire earlier than that under certain circumstances, for example, when there is a reduction-in-force (RIF), reorganization, a transfer of function, or your agency offers you an opportunity to leave under the Voluntary Early Retirement Authority (VERA).

If that’s the case, you can retire as early as 50 with 20 years of service or, if you have 25 years of service, at any age. However, if you take early retirement, your annuity will be reduced by 1/6 of 1 percent for each month you are under age 55. That’s 2 percent per year. (That doesn’t apply to a whole lot of CSRS employees anymore, since the system was closed to new enrollees as of those first hired in 1984 and after.)

The computation of a CSRS retirement annuity is straightforward:

1.5% x your high-3 x 5 years of service, plus
1.75% x your high-3 x all years and full months of service between 5 and 10 years, plus
2% x your high-3 x all years and full months of service over 10 years

This formula will give you your earned annuity amount, which cannot exceed 80 percent of your high-3. While unused sick leave can’t be used to make you eligible to retire, if you are eligible to retire, it will be added to your years of service and used to increase your annuity. Note: On average, 174 hours of sick leave equals one month of service credit, with 2,087 hours equaling one year.

Finally, once you retire you’ll be entitled to receive a cost-of-living adjustment (COLA) to your annuity. But only if one is authorized, which it wasn’t this year. The amount of your COLA will depend on the number of months you were on the annuity roll. For example, if you retired no later than December 3, 2016, you’d receive a full COLA in January 2018, provided there is one. FYI, there weren’t any in 2010, 2011, or 2016.

Next month FEDweek is holding a live CSRS pre-retirement webinar.

It’s crucial that you completely understand your CSRS retirement benefits before you retire.

All federal employees under the CSRS system will benefit from this one hour live training session. It is designed to help you fully understand your CSRS retirement benefits. It is estimated that 80-85 percent of all CSRS employees are eligible to retire now.

This is the first live webinar we have held for CSRS ONLY employees so be sure to reserve your spot now.