FERS Retirement Ballpark

Posted by RP

July 31, 2007

Many queries I’ve received over the past years of this blogs existence revolve around making a ballpark estimate of how much a Federal Annuitant “retiree”) will get at some point in the future when s/he retires. Some federal income streams are relatively easy to estimate, but the FERS (Federal Employee Retirement System) can be particularly complex. O knew quite a bit about FERS but I learned considerably more today from an excellent article by John Elliott in Mike Causey’s July 16th Federal Report column.

As we’ve mentioned here before, total FERS retirement income is determined by three main componetnts:

FERS Basic Benefit: (useful Fed Retirement estimator spreadsheet here … requires Excel or Open Office) In tround nuymbers this is 1% of the emplyee’s top 3 pay per year. There are a number of ways that this basic benfit can be higher, though, including service as a fire fighter or Air Traffic controller and some aditional benefits designed to bridge the gap between retiring short of Social Security retirement age … and some other “kickers”
Social Security Benefit: This kicks in as early as 62. There are a number of good calculators for Social security benefits at the main Social Security site, www.ssa.gov
Thrift Savings Plan: This is the aspect of the three-tier FERS system that the employee has th emost control over. Obviously, if the retirement estimate involves future benefits for a divorcing spouse, this is the part that lawyers need to pay the most attention to. The grade, and thus the annual pay, of an employee are often not under his/her control, and there is also not a lot an employee can do to change their Social Security benefits … but the TSP has a myriad of options and the employee has a very active role in not only deciding upon how much money s/he will contribute but also how s/he manages that money between the present and the time a divided income divorce settlement is to take place. Calculation estimates are available at the TSP main site.

Anyone planning a straight retirement, or, especially working on the issue of dividing assets needs to become very familiar with using the, because valuing a FERS retirement, especially for the future, is not at all what it may seem at first.

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