Paul Haarman, For every single federal employee, the Federal Employee Retirement System (FERS) annuity, often referrers to as a pension, is one of the several benefits provides. The FERS annuity is frequently seen as a valuable retirement benefit. Did you guys know, though, that you can boost your monthly pension annuity by 10% and for the rest of your life? Here’s a step-by-step guide to getting startes:
It is important to understand how you can calculate FERS retirement pension as per Paul Haarman.
Let us take some examples:
Suppose a federal employee is 61 years of age. And served for 28 years with a high three average income of $100,000.
According to the FERS retirement Pension calculator;
3 x Creditable Service Years x 1% equals to Annual FERS Annuity
$100,000 x 1.0% x 28 years equals to $28,000
This is 28%.
So, the Total Basic Annuity is $28,000 a year or $2,333 a month.
Persons who retire aged 62 or older with supportable service of 20 years or more are eligible for an upgraded formula. The amplification is increased from 1% to 1.1%. While this may seem to be a minor increase mostly on the surface, it is a huge 10% rise that will have long-term implications for your retirement income. In addition, if you pick survivor rewards, it will be increased by 10% for the life of your remaining member of the family.
Now take another example of the same individual we assumed in Example 1, but this time, he waited for an additional year and retired at 62.
According to the enhanced FERS retirement Pension calculator;
3 x Creditable Service Years x 1.1% = Annual FERS Annuity
For an employee with High-3 pay of $100,000 and who served for 29 years, this brings:
$100,000 x 1.1% x 29 years equals to $31,900
This is 31.9%.
So, Overall Basic Annuity: $31,900 a year or $2,658 a month.
This rise may or may not be significant to you right now, although in the longer term. And when preparing the financial statements with long-term consequences, the rise is worth contemplating in dollars.
Comparing the two Examples
Let’s compare Example 1 and Example 2 to see Annual, quarterly, and cumulative increases in the FERS annuity (without depreciation and amortization) for 5, 10, and 20 years:
So, as per Paul Haarman, when you are eligible for the 1.1% raise, you should consider continuing on the job for the next year if your health and other considerations permit. Also, keep in mind that other considerations such as a 5% TSP match, TSP contribution, COLA. And an increase in High-3 may have an influence on your calculation. It’s better to talk about this with a qualified specialist who evaluates and calculates FERS pensions.
If you want to discuss your retirement planning options, including FERS retirement eligibility calculation, with federal retirement professionals, get in touch with the experts or professional service providers today. You can easily find such services online and get assistance immediately.