Retirement & Financial Planning Report

If you’re under CSRS and still working, there’s a good chance the so-called 80 percent limit will factor in your work and retirement plans from this point on.

That limit caps your CSRS annuity, generally speaking, at 80 percent of your high-3 salary figure. For most employees, that limit is reached when they have 41 years and 11 months of service. However, CSRS-covered law enforcement officers, firefighters, and Congressional employees can reach that limit a lot faster because their annuities are based on more generous formulas.


Note: There is no limit under FERS; as a practical matter, no one will work long enough to achieve an annuity anywhere near 80 percent of their high-3 under that system.

If you are one of those already at the 80 percent limit, retirement deductions are still being taken out of your salary. If you haven’t reached the limit, they will be when you do. Your excess contributions will be refunded to you when you retire. And you’ll be offered a choice. You can either accept them tax-free (because they were already taxed as a part of your earned income) or you can purchase additional annuity, which isn’t subject to the 80 percent limit.

Under rules mirroring those for the voluntary contributions program, anyone retiring at age 55 or younger can get $7 of additional annuity for every $100 in his account. The amount of annuity that $100 can buy increases by 20 cents for each full year you are over 55 when you retire. For example, if you were age 62, it would be $8.40 more; at age 65, $9.00; at age 70, $10.00. So, the older you are when you retire, the more additional annuity you’ll get. However, the choice is yours. You can either buy additional annuity or pocket the money.

Any unused sick leave hours you have to your credit when you retire is exempt from the 80 percent limit. Those hours will be converted into retirement months and used to increase your annuity.