Federal Employees Retirement System (FERS) retirement benefits are calculated using a formula that takes into account factors such as years of creditable service, high-3 average salary, and an age-related percentage. The high-3 average salary represents the average of the highest three consecutive years of basic pay. This figure is then multiplied by a percentage determined by the employee’s age at retirement and their years of service. For example, an employee retiring at age 62 with 20 years of service would likely have a different calculation than an employee retiring at age 57 with 30 years of service.
Understanding the calculation method is essential for federal employees to effectively plan for their financial future. Accurate estimation of projected retirement income enables employees to make informed decisions regarding savings, investment strategies, and the timing of their retirement. Knowledge of this system also empowers employees to verify the accuracy of their retirement statements and projections provided by the Office of Personnel Management (OPM).
