Reg Jones Expert's View

One of the most significant benefits anyone can acquire and enjoy is a retirement annuity from the federal government. As a percentage of your highest three consecutive years of average salary, it can be pretty impressive. This is especially true for those employees covered by CSRS. To receive an annuity that is 56.25 percent of your highest three consecutive years of average earnings, all you need is to have 30 years of service and be at least 55 years old. And each additional year of service is worth 2 percent more.

Let’s look at an example to see how the numbers add up. If you had 30 years of service at age 55 and worked to age 62, roughly the average retirement age, the percentage of your high-3 that you’d receive would be 70.25. And the more years you work the larger your annuity will be, until you hit a cap of 80 percent. However, if you have unused sick leave sick leave to add on, you can exceed the 80 percent figure.

Now what’s the point of carrying on about the percentage of your high-3 that you’ll receive when you retire? Well, there are two reasons. First, the size of your annuity isn’t based on the amount of money you and your agency contributed to the retirement fund. If that were the case, your account would be empty in a few years. Second, to produce the same amount of annuity, you and your agency would have had to earn a very high rate of interest over your career. Just think how much that would have had to be to produce a lifetime annuity, one that is increased by annual cost-of-living-adjustments (COLAs).

For a handy comparison, all you have to do is go to and plug some numbers into the Thrift Savings Plan’s annuity calculator. It won’t take long for your to see just how you how much you’d have to have in your TSP account to produce a level of monthly income that would match your projected (or actual) monthly retirement annuity. As you’ll see, it would take a lot.