How to Get the Most Out of Your FERS Pension
The federal government’s FERS has a three-legged stool of retirement benefits comprising the Basic Benefit Plan, the Thrift Savings Plan (TSP), and Social Security.
This article focuses on the Basic Benefit Plan, also called the federal government pension.
Pension Calculation for FERS
The FERS Basic Benefit Plan, or pension, is determined by multiplying the duration of creditable service by a percentage (typically 1% or 1.1%) and then multiplying by the “high-3” average wage. The 1% is used for those under age 62 at the time of separation for retirement and those over 62 with fewer than 20 years of service.
If a federal employee quits at 62 with at least 20 years of creditable service, the percentage rises to 1.1%. These three years are typically your last three years of service, but they might be earlier if your basic pay is more. Your basic pay is the basic salary you earn for your job.
As a result of evaluating the three years of your highest pay more heavily to maximize the pension benefit, it makes sense to retire after you have earned the highest salary in the federal government. Furthermore, if you work until age 62 and have 20 years of service, you will receive 10% extra in lifetime pension income!
Survivor’s Benefit
With the pension, the survivor’s benefit is equally essential to consider. That’s particularly important since you can leave the surviving spouse half of your pension if you die before them. The pension annuity is lowered by 10% if the survivor’s benefit is 50%.
The survivor’s benefit is sometimes overlooked when calculating your FERS pension benefit. You can offer your surviving spouse 50% of your annuity for a minor 10% reduction in your monthly payout.
Cost-of-Living Adjustments (COLAs)
COLAs are an essential part of the pension. When the cost of living rises for basic necessities such as groceries, gas, and so on, your purchasing power diminishes.
So, the FERS pension includes a cost of living adjustment. In general, it would be best if you were 62 to increase the cost of living. Inflation is currently near 40-year highs and is unlikely to fall for some time.
The cost-of-living adjustment (COLA) is an essential component of the pension since it is one of the major issues with many pensions that aren’t adjusted for inflation. As a result, your purchasing power erodes over time, and you must make up the difference elsewhere in your budget.
Maximizing FERS
The following are the top four ways to maximize your FERS pension:
1) Retire with at least 20 years of service and at least aged 62. Your monthly pension payment will grow if you can retire with more than 20 years of service. However, aim to maintain a minimum of 20 years and an age of 62.
2) Retire in your 60s with the highest three years of salary. Before you retire, work on achieving your large advancements in the federal government. In this case, your multiple is based on a greater last three years’ wage.
3) Defer taking the pension benefit until you reach 62 to maximize the COLA and then take advantage of it instead. Then, if possible, retire at 62 or later.
4) If married, consider the survivor’s benefit. You may cover your spouse with a 50% monthly annuity for a modest reduction in your monthly annuity.
These four basic guidelines don’t apply to all situations, so you should discuss them with a financial consultant for advice tailored to your situation.
Contact Information:
Email: [email protected]
Phone: 3234811328
Bio:
For over 13 years, Jason Anderson has served as a Personal Financial Advisor, Estate and Retirement Planner, helping to educate individuals from all walks of life and income levels on wise money investment and planning for a comfortable lifestyle and retirement.
Over time, Jason Anderson has become the ‘Go-To’ leading authority on personal financial advising, financial planning, and analysis, as well as retirement planning and financial planning for SMALL BUSINESS OWNERS. He also provides HIGHLY Popular financial education seminars for groups. These financial seminars empower people to more effectively budget, plan, manage their money, and achieve their personal financial goals. As a result of the excellent results, praise, and feedback that their financial seminars have received, the City of Los Angeles, The AFL-CIO union groups, as well as several other organizations, have decided to partner with Jason to more effectively accomplish their mission. He was also honored to be showcased in the November 2014 issue of Forbes Magazine “Americas Financial Leaders” and has been dubbed by the media as ‘The Financial Educator.’
Jason is passionate about the work he does because it brings him joy to help his financial planning and advising clients reach their financial goals. He finds excitement in assisting families in saving and paying for their children’s college education without stress, thanks to the financial plans he designs for them. He also takes pride in witnessing clients reach retirement and enjoy it precisely the way they desire.
Personally, Jason finds joy in being a husband and father of two wonderful children. In his spare time, he enjoys traveling, sports, hiking, and reading.
He works with Employees, Business Professionals, Business Owners, and ‘High Net Worth’ People.
► Like to discuss your personal financial situation?
☏ Call Jason at (323) 481-1328 for a FREE Consultation
✉ Email him at [email protected]
Disclosure:
All annuity and life insurance products are designed to supplement securities as part of an overall plan. The recommendation of annuities and life insurance is not designed to eliminate the need for securities in any way.
Contact Information:
Email: [email protected]
Phone: 3234811328
Bio:
For over 13 years, Jason Anderson has served as a Personal Financial Advisor, Estate and Retirement Planner, helping to educate individuals from all walks of life and income levels on wise money investment and planning for a comfortable lifestyle and retirement.
Over time, Jason Anderson has become the ‘Go-To’ leading authority on personal financial advising, financial planning, and analysis, as well as retirement planning and financial planning for SMALL BUSINESS OWNERS. He also provides HIGHLY Popular financial education seminars for groups. These financial seminars empower people to more effectively budget, plan, manage their money, and achieve their personal financial goals. As a result of the excellent results, praise, and feedback that their financial seminars have received, the City of Los Angeles, The AFL-CIO union groups, as well as several other organizations, have decided to partner with Jason to more effectively accomplish their mission. He was also honored to be showcased in the November 2014 issue of Forbes Magazine “Americas Financial Leaders” and has been dubbed by the media as ‘The Financial Educator.’
Jason is passionate about the work he does because it brings him joy to help his financial planning and advising clients reach their financial goals. He finds excitement in assisting families in saving and paying for their children’s college education without stress, thanks to the financial plans he designs for them. He also takes pride in witnessing clients reach retirement and enjoy it precisely the way they desire.
Personally, Jason finds joy in being a husband and father of two wonderful children. In his spare time, he enjoys traveling, sports, hiking, and reading.
He works with Employees, Business Professionals, Business Owners, and ‘High Net Worth’ People.
► Like to discuss your personal financial situation?
☏ Call Jason at (323) 481-1328 for a FREE Consultation
✉ Email him at [email protected]
Disclosure:
All annuity and life insurance products are designed to supplement securities as part of an overall plan. The recommendation of annuities and life insurance is not designed to eliminate the need for securities in any way.
