Top Federal Government Retirement Tips

Top Federal Government Retirement Tips

Retirement planning is different if your career has been as a federal government employee.

Updated on Jan 15 2020


Retiring from a federal government job is a little different than retiring from other jobs. If you’ve worked in the public sector, then you should be familiar with the Federal Employees Retirement System (FERS). This is a retirement plan that is based on years of service as a federal employee and the minimum retirement age (MRA).

FERS is a retirement plan for all US civilian employees. This includes those in the executive, judicial, and legislative branches of the federal government. Note that this does not cover members of the US military or state or local employees. Employees under the FERS plan receive their benefits from three sources including basic benefit plan, Social Security, and the Thrift Savings Plan (TSP).

Basic Benefits Plan

The Basic Benefits Plan is essentially a pension that the federal employee receives, regardless of how much they have individually contributed. The amount is calculated by the length of service and the average of a worker’s highest salary for three consecutive years. Generally, this is the last three years of work in the federal sector.

Social Security

Federal employees pay into Social Security at the same rate as private employees. Workers who worked ten years paying into social security are eligible for reduced benefits as early as age 62. Currently, unreduced payments start at age 65, but will increase to age 67:

Federal CSRS retirees are subject to the Windfall Elimination Provision (WEP) that reduces Social Security benefits for those with less than 30 years of substantial coverage and who earned a retirement benefit from employment not covered by Social Security…if you are subject to WEP, your earned Social Security benefits will be calculated using a modified formula.

Thrift Savings Plan

The Thrift Savings Plan has tax benefits similar to a 401(k). For each pay period, the agency that a federal employee works at deposits 1% of basic pay into the TSP. Like a 401(k), a worker can make additional contributions, which the agency will match up to 5%. These contributions are tax-deferred and the worker can choose how the funds are invested. If you are a federal worker, it is highly recommended that you contribute up to the 5% that is matched, as that is free money being added to your retirement. TSPs offer different investment choices from low-risk to high-risk.

FERS Minimum Retirement Age

Though retirement age is generally regarded as age 65, the FERS has the minimum retirement age as young as 57. The Balance breaks it down:

The minimum retirement age (MRA) for eligible employees is 57 for anyone born in 1970 or later. The lowest minimum retirement age is 55 for workers born before 1948, and 56 for workers born in 1963 or 1964. All workers born in 1963 or earlier will have reached the minimum retirement age prior to 2019 (or by their birthdate in 2019 if they were born in 1963). For those born after 1964, two months are added to the MRA for each year through 1970.

Tips for a more successful retirement

Because of the different retirement benefits that are offered to federal workers, it’s easier to manage successful investments. That being said, with the available options, reaching out to a professional is advised. Make sure that your financial advisor is a fiduciary. Chartered Federal Employee Benefits Consultants (ChFEBCs) are experts on federal employment benefits including FERS pensions and other retirement offerings. They will also know what retirement planning documents you need. Read our tips to getting financially and mentally prepared for retirement.

FERS makes for an easier retirement

It’s becoming more and more common for retirement packages to offer fewer benefits as time goes on. Because of this, FERS is seen as one of the best retirement packages currently available. With benefits from three different plans, it offers competitive benefits to help with a long-lasting retirement.

Finding a financial advisor may be right for you if you are a federal employee. Understanding your benefits is key to successful retirement planning.

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