Retirement & Financial Planning Report

One of the tasks that consumes the time of pre-retirees is figuring out what their annuity will be. They run the numbers by themselves or with the help of agency benefits specialists, and sometimes pay private sector consultants. Or they turn to online estimators such as the OPM “ballpark” estimator at https://www.opm.gov/retirement-services/calculators/federal-ball-park-estimator.

These estimates can be valuable for long-term planning, in terms of when you might be ready to retire and start drawing benefits (which is a different question than when you will be eligible), and as course checks as you draw nearer to that possible date. Just remember that an estimate is only that—an estimate.

CSRS and FERS are both defined benefit systems, ones where what you will receive is based on three factors: your years and full months of service, highest three consecutive years of average salary, and a formula. What agitates the simple mechanics of a retirement calculation are such things as service – including active duty military – for which you have (or haven’t) made a deposit, service where you took a refund of your retirement contributions and for which you have (or haven’t) made a redeposit, unused sick leave, and any days of total service (actual and credited unused sick leave) that don’t add up to a full month.

In the latter case, days that are left over are discarded and not included in your annuity computation. This is particularly troublesome if you are a FERS employee who will have a CSRS component in your annuity. Both benefits are calculated separately, and any left-over days are dropped from each calculation.

The final determination of what your annuity will be rests with OPM. It will do its first screening at the Retirement Operations Center in Boyers, Pennsylvania. This screening can either lead to a request for more information from you or your placement in what’s called interim pay. Interim pay is an amount which is less than the full amount that it appears at first glance you would be entitled to receive. Your retirement package then goes to OPM’s central office, where a final adjudication is made.

You’ll also want to get an estimate of Social Security benefits. You can get one on request by setting up an account at www.ssa.gov. However, remember that those figures will not reflect potential reductions due to the windfall elimination provision and the government pension offset, if you are under CSRS.

As a part of that process for FERS retirees, OPM will determine if you are eligible for the special retirement supplement, which approximates the amount of Social Security benefit you earned while covered by FERS.

If you believe that the final figure as calculated by OPM is wrong, the door is open to dispute their decision. OPM does err at times, but many such disparities involve a misunderstanding by retirees about what kinds of service are creditable for retirement purposes.

Separately, at https://www.tsp.gov/PlanningTools/index.html the TSP has several online calculators that will estimate the growth of an account and how that might translate into income in retirement. They require that you make numerous assumptions, however, such as future rates of return on your investments.