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6 Common Questions About Federal Retirement Thumbnail

6 Common Questions About Federal Retirement

By Kaleb Robuck

When it comes to retirement planning, Federal employees face some different questions than people who aren’t employed by the state or local governments. Depending on if you are under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS), you might have varying questions, as well. It can be confusing starting to think about retirement as a Federal employee and trying to tackle getting started by yourself.

Therefore, we gathered some common questions Federal Employees have about retirement below and provided some information to help you get started.

1. How can I apply for retirement?

If you are considering retirement, you’re probably wondering how to apply and what that process looks like. In order to qualify for payments from the FERS or CSRS, you have to submit a retirement application. Applications are usually processed within 60 days; however, it could take longer depending on your circumstance and additional information or questions needed.

If you’d like to submit an application, go to the following forms: CSRS | FERS

Before you apply for retirement, you want to make sure you take the correct steps and are eligible.

  • Do you meet the eligibility requirements for your retirement benefit?
  • When do you want to retire?
  • What benefits are you eligible for? (e.g. TSP, Social Security, private pensions, IRA)
    • Try and get an idea of all your retirement income sources and when each is payable.
  • If you are eligible and plan to retire, tell your supervisor about your retirement date and give sufficient notice.
  • Review your OPF to ensure all records are accurate and complete and your insurance is documented.1

2. What happens to my life insurance when I turn 65?

If you retire from federal service and are eligible for FEGLI Basic life insurance, you must make a choice on the amount you want to continue after age 65, or whenever you decide to retire after that. You can choose:

  • 75 percent reduction
  • 50% reduction
  • No reduction

If you are still working after 65, this reduction does not happen. Learn more about how the reduction works here.

3. What kind of death benefit is provided by FEGLI?

As a Federal CSRS or FERS Employee, you do have insurances that are “free” including a survivor death benefit and Social Security survivor income.

Death Benefit

  1. CSRS: Spouse or former spouse of employee who dies in service is entitled to 55% of CSRS employee’s accrued pension.
  2. FERS: Spouse or former spouse of employee who dies in service is entitled to receive.
    1. Basic Employee Death Benefit = "½ the employee’s final salary (or hi-3 average, whichever is higher), PLUS a lump sum amount, roughly around $33k.”
    2. Return of FERS contributions with interest. Only applies to employees with less than 10 years’ service.
    3. Survivor Annuity: If you die with more than 10 years of service, their spouse is entitled to 50% of FERS accrued pension.
  3. Social Security Survivor Benefit: Surviving eligible family members can get a monthly benefit dependent on amount of Social Security accrued.

4. How much of my retirement benefit is taxable?

There are calculators you can use to calculate what your tax-free portion of your annuity will be. You can also calculate what your monthly federal income tax withholding will be. Depending on what the calculators say, you have the option to change the amount of federal tax withheld from your annuity on Services Online.

5. What is the maximum benefit I can receive? 

If you’re a Federal Employee, I’m sure you have heard of the High 3 Salary. This is used to calculate the benefit for your pension you receive in retirement. Your High 3 Salary equals “the highest average pay you earned during any 3 consecutive years of Federal service.”5

$Annual FERS Pension = High 3 Salary x Years of Creditable Service x %Pension Multiplier

Here is an example on how to calculate your High-3 Salary.

Source: "Your High 3 Salary," Plan Your Federal Retirement.com

Under CSRS, your annuity “cannot exceed 80 percent of your high-3 average salary, excluding your unused sick leave.”1

6. What does my Cost of Living Adjustment look like? (COLA)

In order to hedge the effect of inflation on your retirement income, Federal employees receive of Cost-of-Living Adjustment.

If you're under the Civil Service Retirement System (CSRS), every January you'll have a cost-of-living adjustment (COLA) based on the Bureau of Labor Statistics determination of rising costs.

If you're under the newer Federal Employee Retirement System (FERS), your adjustment is based on a diet-COLA formula. "If inflation is 2% or less, they get a full COLA. If inflation is higher, retirees get the COLA minus 1%. Better than most private plans, but still can be a problem (Mike Causey)."4

Learn more here.


Planning for retirement can be overwhelming and stressful for everyone. Federal employees are no exception to that and have unique benefits to consider. Consider working with a trusted financial advisor who is experienced dealing with your specific benefits and employment.

If you have any questions regarding retirement or your benefits, please contact us here, and we are more than happy to help out.



  1. https://www.opm.gov/retirement-services/retirement-faqs/
  2. https://stwserve.com/fegli-the-federal-employees-group-life-insurance-program-part-ii/#:~:text=Until%20the%20reduction%20starts%2C%20the,and%2For%20C%20become%20free.
  3. https://www.thebalancecareers.com/what-are-the-differences-between-fers-and-csrs-1669777#:~:text=Because%20FERS%20has%20three%20components,plan%2C%20and%20Social%20Security%20benefits.
  4. https://federalnewsnetwork.com/mike-causey-federal-report/2021/03/inflation-the-retirees-biggest-enemy/
  5. https://plan-your-federal-retirement.com/your-high-3-salary/#:~:text=Your%20High%203%20Salary%20is%20the%20highest%20average%20basic%20pay,be%20April%202015%20%E2%80%93%20April%202018.
  6. https://www.opm.gov/retirement-services/my-annuity-and-benefits/annuity-payments/#url=Cost-of-Living