Federal Employee’s Retirement
System
Understanding the Three Parts of FERS
Presented by:
Tammy Flanagan
Tammy@nitpinc.com
Resources for
YOU
www.narfe.org
Paris, Texas?
Planning for
your federal
retirement can
make a world of
difference when
you retire.
Paris, France?
Planning for
your federal
retirement can
make a world of
difference when
you retire.
FERS Basic
Retirement and
FERS
Supplement
Your
Federal
Retirement
Social Security
Thrift Savings
Plan
Income Replacement
30+ Years of
Service: 30 %
or more
Full Career
(LEO): 34% or
more
Low Wages:
50%+
$200,000:
$8,000 /year
Medium
Wages: 35 –
40%
$500,000:
$20,000/year
High Wages:
25% or less
$1,000,000:
$40,000/year
FERS Eligibility Rules
Type of Retirement Benefit
FERS Immediate / Optional
Retirement
Special Provisions for Law
Enforcement Officers
(and other special groups)
Age
Service
MRA
60
62
50
Any Age
30
20
5
20
25
FERS Eligibility Rules
Type of Retirement Benefit
Reduced Immediate or Postponed
Optional Retirement
Age
Service
MRA
10
Penalty = 5% / year under age 62!
5
FERS Eligibility Rules
Type of Retirement Benefit
Age
Service
Voluntary Early Retirement Authority
(VERA) or Discontinued Service
Retirement (DSR)
50
Any Age
20
25
Buyout?
VSIP
Voluntary Separation Incentive Payment
FERS Eligibility Rules
Type of Retirement Benefit
Disability Retirement
• Must also apply for Social
Security
• Recalculated at 12 months
and again at age 62
• No FERS Supplement
• General formula used if
retirement eligible
Age
Any Age
Service
18 months
FERS Eligibility Rules
Type of Retirement Benefit
Deferred Retirement
(Based on service at the time of
separation)
Deferred / Reduced
•
•
•
•
•
Age
Service
MRA
60
62
MRA
30
20
5
10
Cannot reinstate FEHB or FEGLI
No COLA on high-three
Cannot credit sick leave hours
General formula (1%)
Resign from agency and apply
later at www.opm.gov
FERS Basic Retirement Benefit =
HighThree
Length
of
Service
1%*
*1.1% if age 62+ with at least 20 years of service
or 1.7% for first 20 years of Law Enforcement calculation
High
Three
Average
Salary
Three Consecutive Years
• Last three years?
Basic Pay
• Includes Locality Pay and
• Law Enforcement Availability Pay
Daily Average
• today’s salary eliminates a day three
years ago – every day
What is Basic Pay?
If it is subject to retirement deductions, it is basic pay
Biweekly
Salary
FERS
Contribution
FERS
Retirement
(Basic Pay)
.8% or 1.3%
Withholding
Example: $3,000 x 1.3% = $39
$3,000 x .8% = $24
All Federal and Military Service
• Must be documented
• Might not be the same as “Leave” SCD
• Unused Sick Leave
Length
of
Service
Deposits and Redeposits
• Temporary Service
• Refunded Retirement Contributions
• Military Deposit
It all adds up!
•
•
•
•
•
Be sure you understand what counts… and what doesn’t
1 month = 1/12 of 1% of your high-three
Example: 1/12 x 1% x $75,000 = $62.50 / year or $5.20 / month
1 year = 1% of high-three
Example: 1% x $75,000 = $750 / year or $62.50 / month
General FERS
Formula
• 1% x high-three x length of service
• 1.1% x high-three x length of service
• Age 62+ with 20+ years of service
Law Enforcement FERS
• 1.7% x high-three x 20 years
• 1.0% x high-three x remainder of
service
Example
General FERS
•1% x $75,000 x 35 = $26,250
•1.1% x $75,000 x 35 = $28,875
Law Enforcement FERS
•1.7% x $75,000 x 20 = $25,500
•1.0% x $75,000 x 5 = $3,750
Your Turn!
Years and Months of Service
Retirement Date:______
Years____ months____
In today’s dollar value, estimate your high-three:
Grade / Step:_______
$_______________
Apply the formula
1% / 1.1% / 1.7%
$_______________
Wait…there might be reductions:
• Survivor benefit election
o 10% to provide 50% to spouse
o 5% to provide 25% to spouse
o Former Spouse
o Court Order
o Less than full-time schedule
o MRA + 10 age reduction
Retirement Withholdings:
• Taxes
o Federal Income Tax
o State Income Tax
• Insurance
o FEHBP
o FEGLI
o FEDVIP
o FLTCIP
The Most Important Thing To Know About
Social Security
• More to those who earn less.
• Less to those who earn more.
How Do Benefits Compare to Earnings?
Source: Annual Trustees' Report, Social Security Administration, 2013; Table V.C7
Women with Dual Entitlement
1960-2012
Married, not working outside home
Married and working outside home
Not married or benefit is higher than spousal
Example:
Jan
•
•
•
•
Age 62: $1,500
Age 66: $2,000
File and Suspend
Delays application to age
70: $2,640
Jean
• Age 62: $1,350
• Age 66: $1,800
• Restricted application: 50%
of his: $1,000
• Delays application to age
70: $2,376
Both live to age 87: $1,071,264
He lives to 79 and she lives to 87: $843,168
Both live to age 79: $589,728
Both file at 62 and live to 79: $581,400
Both file at 62 and live to 87: $855,000
Social Security Estimate
www.socialsecurity.gov
FERS Supplement =
FERS
Service
Age 62
Social
Security
Benefit
40
Example: 30/40 x $1,500 = $1,125 / month
Bottom Line
FERS + Social Security = Enough?
Then, TSP will provide more income!
While Working
Salary
After Retirement
$
FERS Retirement
$
Supplement or
Social Security
$
Expenses
(up or down?)
Clothing
Transportation
Conveniences (eating out,
cleaning service, etc.)
Children
Travel
Volunteering
Education
Family / Caregiving
Healthcare
Questions?