Retirement & Financial Planning Report

Relatively few federal employees are under the Civil Service Retirement System anymore, but those who are generally are retirement-eligible already or are near that point.

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 many CSRS employees today, 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

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.

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, it will be added to your years of service and used to increase your annuity. About 174 hours of sick leave credit equals one month of service credit.

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.