Quick Decision

You don't expect to be able to save very much extra money for your retirement for a long time

To get the most out of FERS, you have to pay more than the 7.0% that the Basic Benefit and Social Security require. You also need to take advantage of the Thrift Savings Plan, especially if you are an upper income employee, for whom Social Security will make up a smaller percentage of retirement income. If you are unable to contribute to the Thrift Savings Plan, switching to FERS could be a mistake.

The Thrift Savings Plan portion of FERS can provide a valuable benefit if you are able to contribute to it. Here's what could happen if you don't carefully consider how much you are able to save, or if you don't decide correctly.

Example: Suppose you transfer because you think the growth potential of your Thrift Savings Plan account can allow you to retire from the Federal Government with a larger benefit under FERS than under CSRS.

You're counting on your agency contributing an amount equal to 5% of your basic pay each pay period. To get that rate of agency contribution, you know you have to contribute at least 5% of your basic pay each pay period.

After you transfer, you find that you miscalculated your ability to save and your budget will not let you make any contribution to the Thrift Savings Plan. All you're able to get is your agency's contribution equal to 1% of your basic pay each pay period.

If you are not able to begin contributing to your TSP account soon after you transfer to FERS, your benefit will probably be significantly less than the benefit you could have received by retiring under CSRS. If you are concerned about whether you can participate adequately in the Thrift Savings Plan, you may want to review your financial situation carefully to see what level of savings you can expect to be able to make.

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To read more about this:

• Thrift Savings Plan under FERS