A Guide on Computing Your FERS Retirement Pension

Check out the full article here: Make an Appointment here: How To Calculate Your FERS Pension Every pay period, the government takes out a very small portion of your pay to go to your pension. However, the amount you receive from your pension is not based on how much you contributed over your career.  It is based on the following three things: Your High-3 Salary Years of (creditable) Service Your Pension Multiplier Although this formula is simple, it gets complicated when calculating your High-3 salary and knowing what actually counts towards credible years of service.For more info, click here for my free training on “example”. Gross Vs. Net Pension One thing that is critical when planning your retirement is calculating your net pension and not just your gross. Your net pension is the actual dollar amount that you will receive each month. To do this calculation you have to include all the reductions to your pension. There can be as much as 7 different reductions to your pension! Click here to learn what 7 reductions could be and how they will affect your retirement....(read more)

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As a government employee, you may be eligible for the Federal Employees Retirement System (FERS) pension when you retire. It is important to understand how to calculate your potential pension so you can adequately plan for your future. Here are the steps to follow: Step 1: Determine Your High-3 Salary Your FERS pension is based on your “High-3” average salary, which is calculated based on your highest three years of pay. To determine your High-3 salary, add up your highest three years of basic pay, and then divide that number by three. Basic pay does not include bonuses, overtime, or any other additional compensation. For example, if your salaries over the last three years are $60,000, $65,000, and $70,000, your High-3 salary will be $65,000. Step 2: Calculate Your Years of Service Your FERS pension is also based on your years of creditable service. Creditable service includes all service with the federal government, including part-time work. To calculate your years of service, you can submit a request to your agency’s Personnel Office, or you can calculate the number of years and months yourself. For example, if you have 20 years and 6 months of service, your creditable service will be 20.5 years. Step 3: Determine Your Pension Benefit To calculate your FERS pension benefit, use the following formula: Pension Benefit = (High-3 Salary x 1% x Years of Creditable Service) + (High-3 Salary x 1.1% x Years of Creditable Service above 20) For example, if your High-3 salary is $65,000 and you have 20.5 years of creditable service, your pension benefit will be: Pension Benefit = ($65,000 x 1% x 20.5) + ($65,000 x 1.1% x 0.5) Pension Benefit = $13,325 + $357.50 Pension Benefit = $13,682.50 per year Step 4: Account for Cost-of-Living Adjustments (COLAs) and Survivor Benefits Your FERS pension benefit will include annual COLAs to help keep pace with inflation. The amount of the COLA each year is based on the Consumer Price Index and is subject to change. You may also choose to have a survivor benefit, which will pay a portion of your pension to your surviving spouse or beneficiary after you pass away. The cost of this benefit will depend on the level of benefit you choose. In conclusion, calculating your FERS pension can be a complex process, but it is important to understand how it works so you can plan for your retirement. Knowing your High-3 salary, years of service, and possible COLAs and survivor benefits can help you estimate your pension and plan for the future. https://inflationprotection.org/a-guide-on-computing-your-fers-retirement-pension/?feed_id=103069&_unique_id=64777f4c9f634 #Inflation #Retirement #GoldIRA #Wealth #Investing #RetirementPension