FERS Retirement Planning Guide

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

1. OPM — FERS Basic Annuity Formula and Supplement.
2. SSA — Retirement Earnings Test Exempt Amounts (2026: $24,480 under FRA).
3. 5 U.S.C. § 8416 — FERS Survivor Election Rules (50% / 25% survivor, 10% / 5% reduction).
4. OPM — FEHB Enrollment in Retirement (5-year pre-retirement eligibility rule).
5. CMS — 2026 Medicare Part B Base Premium $202.90.
6. TSP — Withdrawal Options (post-Modernization Act). SECURE 2.0 § 325 eliminated Roth plan lifetime RMDs starting 2024.
7. 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.