Federal Retirement Calculator High 3

Federal Retirement Annuity Calculator (High-3)

Estimated Annuity:

Annual Annuity:

Monthly Annuity:

This is an estimate based on your High-3 average salary and creditable service. It does not include deductions for health insurance, life insurance, taxes, or survivor benefits. For FERS, it also does not include Social Security or TSP.

Understanding Your Federal Retirement Annuity: The High-3 Calculation

Planning for retirement is a critical step for federal employees, and understanding how your annuity is calculated is key. The "High-3" average salary is a cornerstone of both the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS) annuity calculations. This calculator helps you estimate your potential annual and monthly retirement income based on this crucial metric.

What is "High-3" Average Salary?

Your "High-3" average salary refers to the highest average basic pay you earned during any 3 consecutive years of service. These three years do not have to be your last three years of service, nor do they have to be calendar years. They are typically the years where your basic pay was highest, often occurring towards the end of your career due to promotions and pay raises. Basic pay includes your base salary, locality pay, and certain other regular payments, but generally excludes overtime, bonuses, and most allowances.

How Federal Retirement Annuities Are Calculated

The formula for calculating your federal retirement annuity depends primarily on your retirement system (FERS or CSRS), your High-3 average salary, and your total creditable years of service.

FERS Annuity Calculation

The Federal Employees Retirement System (FERS) covers most federal employees hired after December 31, 1983. FERS is a three-tiered retirement plan consisting of:

1. FERS Basic Annuity: This is what our calculator estimates.
2. Social Security Benefits: Separate from the FERS annuity.
3. Thrift Savings Plan (TSP): A defined contribution plan similar to a 401(k).

The FERS basic annuity is calculated using the following formula:

High-3 Average Salary × Years of Creditable Service × Multiplier

The multiplier depends on your age and years of service at retirement:

• 1.0% (0.01) for most FERS retirees.
• 1.1% (0.011) if you retire at age 62 or later with at least 20 years of creditable service.

For example, a FERS employee with a High-3 of $75,000 and 30 years of service, retiring at age 62, would use the 1.1% multiplier: $75,000 × 30 × 0.011 = $24,750 annual annuity.

CSRS Annuity Calculation

The Civil Service Retirement System (CSRS) covers most federal employees hired before January 1, 1984. CSRS is a defined benefit plan that provides a more generous annuity than FERS, but CSRS employees do not pay into Social Security.

The CSRS annuity calculation uses a tiered multiplier system:

• 1.5% (0.015) for the first 5 years of service.
• 1.75% (0.0175) for the next 5 years of service.
• 2.0% (0.02) for all remaining years of service.

The total percentage is then multiplied by your High-3 average salary. For example, a CSRS employee with a High-3 of $75,000 and 30 years of service:

• First 5 years: 5 × 0.015 = 0.075
• Next 5 years: 5 × 0.0175 = 0.0875
• Remaining 20 years (30 – 10): 20 × 0.02 = 0.40
• Total Multiplier: 0.075 + 0.0875 + 0.40 = 0.5625
• Annual Annuity: $75,000 × 0.5625 = $42,187.50

CSRS annuities are capped at 80% of your High-3 average salary. Unused sick leave can also be converted into additional creditable service for CSRS annuity calculations, potentially increasing your total years of service.

Important Considerations and Limitations

• Deductions: Your actual take-home annuity will be less than the calculated amount due to deductions for federal and state taxes, health insurance (FEHB), life insurance (FEGLI), and survivor benefits if elected.
• Cost of Living Adjustments (COLAs): Annuities are subject to annual COLAs, which help maintain purchasing power. FERS COLAs are generally lower than CSRS COLAs, especially in periods of high inflation.
• Minimum Retirement Age (MRA): For FERS, retiring before your MRA (which varies by birth year) can result in a permanent reduction in your annuity unless you meet specific criteria. This calculator does not account for MRA reductions.
• Social Security and TSP (FERS): Remember that the FERS basic annuity is just one component of your retirement income. Social Security and your TSP savings will also play significant roles.
• Estimates Only: This calculator provides an estimate. For precise figures, always consult with a benefits specialist from your agency or the Office of Personnel Management (OPM).

How to Use the Calculator

1. High-3 Average Salary: Enter your estimated highest average basic pay over any three consecutive years.
2. Total Creditable Service Years: Input your total years and months of federal service (round months to the nearest whole year for simplicity, or use decimals for more precision, e.g., 25.5 years).
3. Age at Retirement: Enter your age when you plan to retire. This is crucial for the FERS enhanced multiplier.
4. Retirement System: Select whether you are covered by FERS or CSRS.
5. Click "Calculate Annuity" to see your estimated annual and monthly retirement income.

By using this calculator, you can gain a better understanding of your potential federal retirement income and make more informed decisions about your financial future.