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U.S. Office of Personnel Management
FERS Election Opportunities

Federal Employees Retirement System (An Overview of Your Benefits)

Examples

The following examples illustrate the annual benefits that you can expect to receive under the Federal Employees Retirement Sytem (FERS). In reviewing these examples, note that the benefits shown are estimates based upon certain assumptions about future salary increases, investment returns, and other factors that directly affect your final level of benefits.

Keep in mind the following features of specific benefit components:

Two types of FERS benefits are shown. The "FERS basic benefit" is your regular annuity based on total years of service and your high-3 average salary. The "special supplement" is a substitute for Social Security that may be payable to you from when you retire under FERS until age 62. In most cases your actual Social Security benefit at age 62 will be higher than the FERS supplement you receive before age 62.
Estimated Social Security benefits do not include any spousal or dependent benefits that may be available. These additional payments could significantly increase the total value of your Social Security benefits.
Estimated benefits from the Thrift Savings Plan are shown in terms of a "single life annuity" purchase with your account when you retire. The annuity includes 3% annual cost-of-living adjustments to help protect its purchasing power during your retirement years. These projected benefits are based on career-long investments at the stated percentages of pay. Your actual Thrift Savings Plan benefits will depend on your account's investment earnings and the specific payment form you elect when you retire.

Examples 1 and 2 are good illustrations of how Social Security provides a larger percentage of income to lower income employees than to higher income employees. Example 2 also shows that the higher income employee needs to save more in his TSP account to receive the same percentage of his final salary as the lower paid employee in example 1.

All benefits are shown in 1996 dollars. Annual benefits have been rounded to the nearest hundred dollars and percentages may not total exactly due to rounding. The economic assumptions used to create these examples are:

Inflation 3.5%

All wages 3.5%

Federal wages 3.5%

Nominal Interest 7.5%

Real Interest 4.0%

Example 1. Anne
Main Features:

FERS coverage begins at age 25 in 1996
Retirement at age 57 with 32 years of service in 2028
Entry at Grade 3, Step 1
Retirement at Grade 7, Step 10, salary $32,600
3% Thrift Savings Plan contribution (plus 4% from agency)
Anne's estimated retirement benefits at age 57 under FERS are:

Initial FERS Benefit Dollar Amount As % of Final Year's Salary

Basic FERS Annuity $9,600 29%

Special Supplement $6,200 19%

Thrift Savings Plan $6,600 20%

Total Annual Benefits $22,300 69%

The special annuity supplement is payable until age 62. Anne's regular Social Security retirement benefits starting at age 62 would be about $7,200 22% of her final salary.
If Anne had contributed 5% of her salary to the Thrift Savings Plan, rather than 3%, her yearly Thrift Savings Plan benefit would have been $9,400. This would increase Anne's total initial FERS benefit to $25,200 per year 77% of her final yearly salary of $32,600.

Initial FERS Benefit	Dollar Amount	As % of Final Year's Salary
Basic FERS Annuity	$9,600	29%
Special Supplement	$6,200	19%
Thrift Savings Plan	$6,600	20%
Total Annual Benefits	$22,300	69%

Example 2. Bob
Main Features:

FERS coverage begins at age 25 in 1996
Retirement at age 57 with 32 years of service in 2028
Entry at Grade 7, Step 1
Retirement at Grade 13, Step 10, salary $68,700
3% Thrift Savings Plan contribution (plus 4% from agency)
Bob's estimated retirement benefits at age 57 under FERS are:

Initial FERS Benefit Dollar Amount As % of Final Year's Salary

Basic FERS Annuity $20,200 29%

Special Supplement $8,800 13%

Thrift Savings Plan $12,700 18%

Total Annual Benefits $41,700 61%

The special annuity supplement is payable until age 62. Bob's regular Social Security retirement benefits starting at age 62 would be about $10,500 -- 15% of his final salary.
If Bob had contributed 5% of his salary to the Thrift Savings Plan, rather than 3%, his yearly Thrift Savings Plan benefit would have been $18,100. This would increase Bob's total initial FERS benefit to $47,100 per year 69% of his final yearly salary of $68,700.

Initial FERS Benefit	Dollar Amount	As % of Final Year's Salary
Basic FERS Annuity	$20,200	29%
Special Supplement	$8,800	13%
Thrift Savings Plan	$12,700	18%
Total Annual Benefits	$41,700	61%

Example 3. Charles
Main Features:

FERS coverage begins at age 40 in 1996
Retirement at age 60 with 20 years of service in 2016
Entry at Grade 7, Step 1
Retirement at Grade 12, Step 8, salary $54,800
3% Thrift Savings Plan contribution (plus 4% from agency)
15 years prior Social Security
Final pre-Federal salary $23,500
Charles's estimated retirement benefits at age 60 under FERS are:

Initial FERS Benefit Dollar Amount As % of Final Year's Salary

Basic FERS Annuity $9,900 18%

Special Supplement $4,900 9%

Thrift Savings Plan $5,500 10%

Total Annual Benefits $20,300 37%

The special annuity supplement is payable until age 62. Charles's regular Social Security retirement benefits starting at age 62 would be about $9,700 --18% of his final salary. (They include his pre-Federal employment.)
If Charles had contributed 5% of his salary to the Thrift Savings Plan, rather than 3%, his yearly Thrift Savings Plan benefit would have been $7,900. This would increase Charles's total initial FERS benefit to $22,700 per year -- 41% of his final yearly salary of $54,800.

Initial FERS Benefit	Dollar Amount	As % of Final Year's Salary
Basic FERS Annuity	$9,900	18%
Special Supplement	$4,900	9%
Thrift Savings Plan	$5,500	10%
Total Annual Benefits	$20,300	37%

Example 4. Donna
Main Features:

FERS coverage begins at age 25 in 1996
FERS service ends at age 45 in 2016
Deferred benefit at MRA with reduction
Entry at Grade 7, Step 1
Separation at Grade 12, Step 8, salary $54,800
3% Thrift Savings Plan contribution (plus 4% from agency)
17 years work after leaving government
Donna can begin receiving deferred FERS benefits at age 62. She also can begin receiving them as early as age 57, which is her Minimum Retirement Age. If she receives them at age 57, they are reduced 5% per year that she is under age 62, a 25% reduction.
Donna's estimated retirement benefits at age 57 under FERS are:

Initial FERS Benefit Dollar Amount As % of Final Year's Salary

Basic FERS Annuity $4,900 9%

Special Supplement $0 0%

Thrift Savings Plan $8,100 15%

Total Annual Benefits $13,000 24%

Donna does not receive the special annuity supplement. Donna's regular Social Security retirement benefits based on her Federal employment starting at age 62 would be about $11,000 - 20% of her final salary. However, since she continued working elsewhere, her age 62 Social Security benefit is based on the cumulative total benefit she earned.
If Donna had contributed 5% of her salary to the Thrift Savings Plan, rather than 3%, her yearly Thrift Savings Plan benefit would have been $11,500. This would increase Donna's total initial FERS benefit to $16,400 per year, 30% of her final yearly salary of $54,800.

Initial FERS Benefit	Dollar Amount	As % of Final Year's Salary
Basic FERS Annuity	$4,900	9%
Special Supplement	$0	0%
Thrift Savings Plan	$8,100	15%
Total Annual Benefits	$13,000	24%

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Back to FERS: An Overview of Your Benefits Table of Contents

Updated 14 May 1998

Inflation	3.5%
All wages	3.5%
Federal wages	3.5%
Nominal Interest	7.5%
Real Interest	4.0%