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How federal employees can check if their retirement estimate is accurate
Estimating your post-retirement income isn’t just math, it’s about getting the right data, understanding your service credit and avoiding costly missteps.
According to one definition of the word “estimate” from the Merriam-Webster Dictionary, it means “to judge tentatively or approximately the value, worth, or significance of.” Have you attempted to estimate the income you will have after retirement?
When planning your retirement, it is important to ensure that you are financially ready to make this significant decision. After all, a common cause of stress is not being financially secure. According to an article from the Harvard Business Review, money is a common source of stress for many people at different stages of life. Financial stress can increase in retirement, when people stop working and therefore relinquish their ability to grow their savings. A CNBC feature on retirement found that 37% of Americans feel unprepared or unsure if they are on track for retirement.
One way that federal employees can feel more secure as they enter the transition to retirement is to have an accurate estimate of their income in retirement. There are three sources of retirement income for most federal workers:
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The FERS Basic Retirement Benefit
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Social Security retirement
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Income generated from the Thrift Savings Plan
Ways to estimate your FERS retirement benefit
Today, let’s look at the ways federal employees can estimate the value of their FERS basic retirement benefit:
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Request an estimate from Human Resources for a specific retirement date
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Use software to do it yourself
GRB Platform: Government Retirements and Benefits (GRB) Full Platform is a web-based system that allows federal employees and retirement and benefits specialists to access the system with a web browser. GRB Full Platform provides benefits specialist tools to perform their day-to-day job, including preparing service histories, creating retirement estimate reports, and other related estimate reports.
FHR Navigator: Federal Human Resources (FHR) Navigator is a collection of software tools owned by Economic Systems Inc. (EconSys) and used by some federal agencies to manage HR functions. The system allows for more streamlined retirement planning and personal information management.
Federal Ballpark E$timate®: The Federal Ballpark Estimate (FBE) includes projected federal annuity and Thrift Savings Plan benefits to help you quickly identify approximately how much you need to save to fund a comfortable retirement
Run the numbers yourself if you understand the mechanics of the computation
No matter which method you use to estimate your FERS basic retirement benefit, it is important to know how closely these projections match what will actually be deposited into your bank account each month after you retire. Here are some things to help ensure that you are looking at the “net” income that reflects your federal career.
Basic data
When estimating your FERS basic retirement benefit, remember that it starts with your length of creditable service and your high-three average salary. Be sure that you are using an estimate that:
It may sound trivial, but it is very important to ensure that the basic data used to compute the estimate — whether prepared by HR or through software — is accurate. Check the following for accuracy:
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Name
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Date of birth
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Retirement service computation date (SCD)
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Sick leave balance used to compute the estimate (is this your current balance, or has it been projected to your retirement date?)
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Date of retirement the estimate is based on
Creditable service
Make sure your retirement estimate reflects all your creditable civilian and military service. Has all your service been properly documented in your electronic Official Personnel File (eOPF)? Review the following and retain personal copies in a safe place:
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Form SF 50’s or other official records of the beginning and ending dates of each federal appointment along with any change in your work schedule (see blocks 32 and 33 on form SF 50) and any change in your retirement coverage (see block 30 on form SF 50).
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Form DD-214 or other records of active-duty military service
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Transcript of service if you served in one of the military academies (United States Military Academy at West Point, United States Naval Academy, United States Air Force Academy, or United States Coast Guard Academy) if you worked on Capitol Hill (Senate Disbursing Office at (202) 224-3205)
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Other records of federal employment, see the CSRS and FERS Handbook, Chapter 20, Creditable Civilian Service or Chapter 22, Creditable Military Service
Be sure that the estimate is also based on service credit that includes paid deposit or redeposits, if that service wasn’t covered by FERS contributions or those contributions were previously refunded. This might include active-duty military service, civilian service not covered by FERS contributions, and civilian service deposits that were refunded to you after a break in service.
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If you have not paid a civilian service deposit and are within six months of retirement, you should submit your request to make the deposit or redeposit at the same time you submit your application for retirement. You can use a form or letter to do this or submit a completed form SF 3108. OPM will notify you of any amounts due so you can decide whether or not to make the payment. OPM will not authorize your regular annuity payments until they have received your decision about the payment.
Important planning tip: Did you retain or request a record of deposits or redeposits already paid? Military deposit records are retained in your agency payroll office until you resign or retire. Save documentation that shows your deposit was paid in full. Civilian service deposit records are retained by OPM. Keep the OPM statement showing full payment and consider providing a copy to your benefits specialist to file in your eOPF.
Reductions and withholdings
Does the retirement estimate reflect the appropriate reductions and withholdings?
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Reductions that may impact your retirement include:
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Age reduction applied for MRA + 10 retirement
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The appropriate pro-ration factor for part-time service that occurred during your federal career
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Reduction for the Alternative Form of Annuity (AFA)
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Withholdings that your retirement may incur:
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Federal income tax
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State income tax, where applicable
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Insurance premiums
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FEHB
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FEGLI
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FEDVIP Dental
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FEDVIP Vision
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FLTCIP
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Are you entitled to the FERS annuity supplement?
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Does the estimate include an estimate of the additional amount of the supplement?
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For Voluntary Early Retirement Authority (VERA) and Discontinued Service Retirement (DSR), remember that the supplement will not be paid until you have reached your Minimum Retirement Age (MRA)
Explore other retirement dates
Have you estimated your retirement for different dates? For example, consider estimating your benefit at the following key times:
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At your first eligibility for an unreduced voluntary retirement:
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When you have reached your MRA with 30 or more years of service; or
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At age 60 with 20 or more years of service, if you won’t have 30 years of service by then; or
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At age 62 with 5 or more years of service, if you won’t have 20 years of service by then.
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Age 62 or older with 20 or more years of service to qualify for the 1.1 percent annuity factor in the computation instead of 1.0 percent. Remember that under FERS, cost-of-living adjustments are not computed until after your 62nd birthday (exceptions for special groups such as law enforcement officers, firefighters, and air traffic controllers; disability annuitants; and survivor annuitants).
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At your MRA with more than 10 years, but less than 30 years of service
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When eligible for VERA or DSR (see above)
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What else?
Now that you have a good idea of your FERS basic retirement benefit, you can also estimate the following additional sources of income you will need to live comfortably:
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Income from earnings you may have from post-retirement wages or salaries