FERS Retirement Planning Guide

Q: What is the FERS annuity formula?

The FERS basic annuity formula is: 1% × high-3 average salary × years of creditable service. If you retire at age 62 or later with at least 20 years of service, the multiplier increases to 1.1%, giving you a permanent 10% boost to your pension. For example, a GS-14 with a $145,000 high-3 salary and 30 years of service retiring at age 62 receives: 1.1% × $145,000 × 30 = $47,850 per year ($3,988/month). The same employee retiring at 57 uses the 1.0% multiplier: $43,500 per year. The high-3 is the average of your highest 36 consecutive months of basic pay — locality pay counts; overtime, awards, and Sunday premium pay do not.

Q: When can I retire under FERS?

FERS offers four standard retirement paths. (1) MRA + 30 years: retire at your Minimum Retirement Age (55 to 57 depending on birth year) with full, unreduced annuity and FERS supplement. (2) Age 60 + 20 years: unreduced annuity and supplement. (3) Age 62 + 5 years: unreduced annuity using 1.1% multiplier if 20+ years; no supplement because you are already Social Security–eligible. (4) MRA + 10 years: earliest exit, but annuity is reduced 5% for every year you are under 62, and the FERS supplement is excluded. Most employees born in 1970 or later have an MRA of 57, meaning the earliest unreduced path is age 57 with 30 years of service.

Q: What is the FERS supplement and when does it end?

The FERS Special Retirement Supplement bridges the income gap between early federal retirement and Social Security eligibility at 62. The formula is: (estimated Social Security benefit at 62) × (FERS service years ÷ 40). For example, a retiree with a projected $2,200/month SS benefit at 62 and 30 FERS years receives $2,200 × (30 ÷ 40) = $1,650/month. The supplement stops permanently the month you turn 62 — regardless of whether you claim Social Security. There is no COLA on the supplement while it pays. The 2026 earnings test threshold is $24,480: if you earn wages or net self-employment income above that after retiring, OPM reduces the supplement $1 for every $2 over the limit.

Q: Do I need Medicare Part B if I keep FEHB in retirement?

Not necessarily. FEHB stays primary when you have it without Medicare Part B — meaning FEHB pays first and there is no coverage gap for most services. Part B (2026 base premium: $202.90/month, higher with IRMAA) adds a secondary payer, and some FEHB plans waive cost-sharing entirely when you have Part B. Others provide minimal additional benefit. Whether Part B makes financial sense depends on your specific FEHB plan's out-of-pocket structure, your health utilization, and your IRMAA bracket. The critical constraint is the 5-year FEHB rule: you must have had FEHB enrolled for the 5 years immediately before retiring to keep it in retirement. Medicare enrollment has separate Part B special enrollment windows — missing them means a 10% per-year late penalty.

Q: Should I choose the 50% or 25% FERS survivor annuity?

Choosing the full 50% survivor annuity costs you a permanent 10% reduction in your own annuity; the 25% option costs 5%. In exchange, your surviving spouse receives 50% or 25% of your pre-reduction annuity for life. The break-even is roughly 4–5 years of the surviving spouse's benefit payments covering the cost of your annuity reduction. If your spouse is significantly younger or in better health, the full 50% election is usually the financially prudent default — the survivor benefit is inflation-adjusted (receiving the same COLA your annuity gets after 62) and cannot be purchased later. The alternative of taking no survivor election and buying private life insurance works only if you are insurable at a competitive premium, and it requires rigorous ongoing discipline to maintain the policy.

Q: Should I roll my TSP to an IRA when I retire?

In most cases, no — at least not immediately. The TSP's G Fund has no private-sector equivalent: it currently yields approximately 4.4% with zero principal risk, backed by U.S. Treasury securities. TSP expense ratios are among the lowest in the world (0.033–0.049% as of 2026), far below typical IRA fund options. Rolling TSP to an IRA before age 59½ eliminates the Rule of 55 penalty exception — federal employees who separate at age 55 or later can withdraw TSP penalty-free, a benefit that disappears the moment the balance moves to an IRA. The standard strategy is to keep the G Fund and traditional TSP balance in TSP through the early retirement years, and consider rolling Roth TSP to a Roth IRA (eliminating future RMDs) and rolling traditional TSP equities to an IRA at or after 59½ when investment flexibility becomes more valuable.

An honest framework for the decisions at hand. Not tax or investment advice — your specifics matter.

The FERS three-legged stool

FERS basic annuity: pension component. 1% × high-3 × years (1.1% if retiring 62+ with 20+ years). Typically 30-45% of pre-retirement income.
Thrift Savings Plan (TSP): 401(k)-equivalent with gov't match. Typically 20-30% of retirement income if well-funded.
Social Security: normal SS benefits. Can coordinate with FERS supplement.
Integration matters more than any single component — optimizing one at expense of others is suboptimal.

High-3 optimization

Basic annuity = 1% × average of 3 highest consecutive years of basic pay × years of service.
GS step increases, promotions, and locality pay all count. Sunday premium, overtime, awards do NOT count.
Timing matters: retirement date at end of step-increase year vs beginning can swing high-3 by thousands/year permanently.
Work 3+ years at highest grade before retiring for full effect.

FERS supplement — the most misunderstood benefit

Pre-62 retirement benefit for FERS retirees with 20+ years of service at Minimum Retirement Age (55-57 depending on birth year), or 30+ years at MRA.¹
Formula: (projected SS benefit at 62) × (FERS years / 40). Approximation of what your SS would be at 62 pro-rated to your federal tenure.
Stops at age 62 regardless of whether you claim SS.
Earnings test: if you earn above the annual SS earnings limit ($24,480 in 2026), supplement reduces $1 for every $2 earned above.² Plan post-retirement employment accordingly.

Survivor annuity election

FERS survivor elections (under 5 U.S.C. § 8416): two options — 50% survivor (you take a 10% annuity reduction; surviving spouse gets 50% of your pre-reduction annuity for life), or 25% survivor (you take a 5% reduction; spouse gets 25%).³
If married, spouse must consent in writing (notarized) to anything less than the full 50% survivor election.
30-day window: after retirement begins, you have a limited window to change the election (typically up to 18 months for marriage-related changes per OPM rules). After that, it's locked for life.
Alternative: take full annuity (0% survivor) and buy external term life insurance. Works if you're insurable and the math favors it — but requires rigorous comparison of insurance cost vs. the permanent 10%/5% reduction.

FEHB in retirement + Medicare

FEHB continues into retirement if you had it for 5 years immediately before retiring.⁴ Premiums are paid by the retiree post-retirement (with the government contributing the employer share).
At 65, Medicare Part A is premium-free for those with 40 quarters of SS-covered employment (which includes all FERS employees). FEHB + Part A is the most common combination.
Part B: 2026 base premium $202.90/month (more if IRMAA applies).⁵ Whether to enroll alongside FEHB is debated: some plans waive deductibles when combined with Part B; others leave Part B largely duplicative.
Part D (prescription drugs): FEHB plans generally provide drug coverage equal to or better than Part D for most retirees — enrolling in Part D typically unnecessary and can trigger unnecessary premiums.
Review FEHB plan annually during Open Season (November-December) — plans change benefits and premiums every year.

TSP withdrawal strategies

TSP Modernization Act of 2017 (effective 2019) added significantly more flexibility than legacy TSP.⁶
Options: monthly payments (changeable anytime, mix of G/L funds), partial withdrawals, single payment, transfer to IRA, annuitize via MetLife provider.
Strategies: draw from TSP before IRAs is usually inefficient (TSP fees are ultra-low — 0.05% — so tax-deferred compounding is cheapest there). Roth TSP preserves best for last; SECURE 2.0 § 325 eliminated Roth 401(k)/TSP lifetime RMDs starting 2024 (Roth IRA never had them).
Roth conversion: TSP does not allow in-plan Roth conversions of traditional TSP balances. To convert, first roll traditional TSP to a traditional IRA, then Roth-convert from there.

CSRS and CSRS Offset

Remaining CSRS and CSRS-Offset retirees have larger pensions than FERS but historically had WEP/GPO reductions on Social Security benefits. The Social Security Fairness Act (signed January 2025) repealed both WEP and GPO retroactive to January 2024.⁷ CSRS retirees previously affected should file new SS spousal/survivor benefit applications — retroactive payments may be due.
CSRS-Offset: SS-integrated variant of CSRS. At age 62 (or retirement, whichever later), basic annuity reduces by the portion of the SS benefit attributable to CSRS-Offset service.
Voluntary contributions (CSRS-VC): can be taken as lump sum at retirement, providing modest after-tax nest egg if maxed. Rolled to IRA for tax-deferred growth if not needed immediately.
Specialist required — CSRS math rarely applies outside federal service, and the WEP/GPO repeal materially changed retirement income for many.

Sources

OPM — FERS Basic Annuity Formula and Supplement.
SSA — Retirement Earnings Test Exempt Amounts (2026: $24,480 under FRA).
5 U.S.C. § 8416 — FERS Survivor Election Rules (50% / 25% survivor, 10% / 5% reduction).
OPM — FEHB Enrollment in Retirement (5-year pre-retirement eligibility rule).
CMS — 2026 Medicare Part B Base Premium $202.90.
TSP — Withdrawal Options (post-Modernization Act). SECURE 2.0 § 325 eliminated Roth plan lifetime RMDs starting 2024.
SSA — Social Security Fairness Act (WEP and GPO repealed, Jan 2025).

FERS benefits rules verified against OPM publications and current as of April 2026. The Social Security Fairness Act (January 2025) materially changed the SS math for CSRS retirees — anyone affected should reapply.

Frequently Asked Questions

What is the FERS annuity formula?

The FERS basic annuity formula is: 1% × high-3 average salary × years of creditable service. If you retire at age 62 or later with at least 20 years of service, the multiplier increases to 1.1% — a permanent 10% pension boost. For example, a GS-14 with a $145,000 high-3 and 30 years retiring at 62: 1.1% × $145,000 × 30 = $47,850/year. The same employee retiring at 57 gets $43,500. Locality pay counts toward high-3; overtime, awards, and Sunday premium do not.

When can I retire under FERS?

FERS has four standard paths: (1) MRA + 30 years — full unreduced annuity + FERS supplement. (2) Age 60 + 20 years — full annuity + supplement. (3) Age 62 + 5 years — full annuity at 1.1% multiplier if 20+ years; no supplement. (4) MRA + 10 years — earliest exit, but annuity is reduced 5% per year under 62, and no supplement. Most employees born in 1970 or later have an MRA of 57. See the FERS eligibility calculator for your specific date.

What is the FERS supplement and when does it end?

The FERS supplement bridges the gap between early retirement and Social Security at 62. Formula: (estimated SS benefit at 62) × (FERS years ÷ 40). A retiree with a $2,200/month SS estimate and 30 FERS years gets $1,650/month. The supplement stops permanently at 62 — no exceptions. The 2026 earnings test: $24,480. Earn wages above that and OPM cuts the supplement $1 for every $2 over. Read the full FERS supplement guide.

Do I need Medicare Part B if I keep FEHB in retirement?

Not necessarily. FEHB remains your primary payer without Part B — no coverage gap for most services. Part B (2026 base: $202.90/month, more with IRMAA) adds a secondary payer; some FEHB plans waive all cost-sharing when you have both. Whether Part B pays depends on your specific plan's out-of-pocket structure, utilization, and income. The hard constraint: you must have carried FEHB for 5 continuous years immediately before retiring to keep it in retirement. See the FEHB + Medicare coordination guide for the full decision framework.

Should I choose the 50% or 25% FERS survivor annuity?

The 50% survivor election costs a permanent 10% annuity reduction; 25% costs 5%. Your spouse receives that share of your pre-reduction annuity for life if you die first. Break-even is roughly 4–5 years of survivor payments. If your spouse is younger or in good health, the 50% election is usually the prudent default — the benefit is COLA-adjusted and cannot be added later. The alternative (no election + private life insurance) works only if you are insurable at competitive premiums and will maintain the policy. Use the survivor annuity calculator to model your specific numbers.

Should I roll my TSP to an IRA when I retire?

In most cases, no — at least not immediately. The TSP G Fund yields approximately 4.4% with zero principal risk and has no private-sector equivalent. TSP expense ratios (0.033–0.049% in 2026) are among the world's lowest. Rolling TSP to an IRA before 59½ also eliminates the Rule of 55 penalty exception — federal employees who separate at 55 or later can withdraw TSP penalty-free, which disappears on rollover. The standard strategy: keep G Fund and traditional TSP balance in place through early retirement; consider rolling Roth TSP to a Roth IRA (eliminating future RMDs) and rolling traditional TSP equities to IRA at or after 59½. Read the full TSP rollover vs. IRA guide.

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