Getting a good idea of your base pension income prior to retirement will help in building your retirement plan. This is only 1 of the 3 basic streams of income we plan for in most retirements, but it’s important to get it right!
Things To Know About Pension Calculation
Here are a few important things to know when it comes to Federal Pension Calculation. For further information and to see how this applies to your specific retirement, contact us!
Here are a few important things to know when it comes to Federal Pension Calculation. For further information and to see how this applies to your specific retirement, contact us!
- Basics
- Considerations
- How Can FERA Help
Understanding some basics of the calculation
- The basic calculation for the FERS pension is “Years of Service (YOS) x High 3 Base Pay x 1%”.
- “High 3” is the average of the highest 3 years of BASE pay (usually your last years but not always). The 3 years of service you use to calculate MUST be consecutive.
- Any accumulated SICK leave will count towards your calculation, you will receive a lump sum check after retirement for any unused ANNUAL leave.
- You will hear the “pension payments” referred to as “annuity payments”. The 2 are interchangeable.
There’s the rule. And there’s the exception to the rule!
- “Years of Service” can include military service and part time service too but most times you will need to “buy this time back” in order for it to count in the calculation.
- Most people are under the FERS system, but there are still some CSRS retirees out there. If you’re one of them, the calculation will be completely different, so it’s important to know what system you’re under.
- If you choose to provide survivor benefits to your spouse or dependents, it will affect the amount of your monthly pension.
- Early retirement may result in a reduction of benefits, while delaying retirement beyond your minimum retirement age may increase your pension amount.
The devil is in the details.
There are a lot of considerations when calculating your federal annuity. Thankfully our trained retirement advisors know all the right questions to ask in order to make sure we’re covering all the bases and calculating the pension CORRECTLY to maximize your benefit. This is just 1 of the 3 main streams of income (or “legs of the stool”) we will help you figure into your perfect retirement plan!
