What is FERS and How to Calculate Your FERS Benefits?

Federal Employee Benefits System or FERS is a pension-like system that is available to the civil citizens of the USA who are employed in the government sector. Available to employees of the judiciary, executive and legislative fields, FERS is a benefit that is unavailable to the military personnel of the country as well. However, if you are someone who does fall into the eligibility criteria, it is important that you find the federal retirement benefits estimate beforehand. Now, you can easily choose the federal retirement benefits calculator or seek assistance from a financial professional which actually is advisable since you are dealing with the future face value of your assets and savings here.

Now, the one question where a lot of beneficiaries get stuck is how is the FERS Benefit actually calculated and if there’s a certain formula to it. First of all, yes, the FERS benefit is calculated with the help of two formulas. One of the formulas is used to find the federal retirement benefits estimate in case you retire before the age of 62 years. The other one, with a slight variation, is used to calculate the benefits gained in case you retire at or after turning 62. To calculate these estimates, though, you need to have knowledge of terms that are used to calculate the FERS benefits. These terms, along with the formula, are mentioned below.

1. Years of Service (YOS)

As is suggestive from the term itself, YOS is the total number of years that you’ve been a working member or service person of a government office(s) that fall under the purview of FERS.

2. Average high three- year salary

The average high three-year salary is basically the highest average of the basic pay that you might have received in any three consecutive years of your service under FERS.

3. Cost of Living Adjustment (COLA)

COLA, as you might be aware, is the regular increase in your pay that is made keeping in mind the current cost of living and market standards of the country.

4. 1% vs 1.1%

Now, when you choose the federal retirement benefits calculator, you’ll become aware that there is a slight change in the formula when you calculate FERS for retirement before age 62 and retirement at or after 62. The multiplier is 1.1% in the latter case, while it stops at 1% for the former.

The formula for you to find the federal retirement benefits estimate is:

Years of Service x {1% or 1.1 % (Depending on age as on the date of retirement)} x Average high 3-year salary (COLA Yearly) [COLA not to be taken into consideration in case of retirement before the age of 62 years] = ANNUAL FERS

Author’s Bio: The author is a blogger. This article is about how to calculate your FERS benefits.

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Felix awet Joined: January 27th, 2020