Mainstreet Financial Education · Federal Employees
Under FERS, your retirement is not one benefit but several built to work together. Understanding how the pieces connect is what separates a confident retirement date from a guess.
FERS was built as a three-legged stool. No single leg is meant to carry the whole load, and a decision about one almost always affects the others.
Your basic annuity uses one formula: years of creditable service, multiplied by your high-3 average salary, multiplied by a percentage. The high-3 is the average of your highest 36 consecutive months of basic pay, which is usually your final three years. It does not include overtime or bonuses.
That single condition, reaching 62 with 20 years, is why a retirement date a few months apart can change a lifetime benefit. Unused sick leave can also convert to extra service credit.
If you retire before 62 with an immediate, unreduced annuity, the FERS supplement bridges the gap until Social Security begins. It approximates the Social Security benefit you earned during your federal service, and it ends at 62 when Social Security can take over, so your income does not drop.
If you take other work while receiving the supplement and earn more than $24,480 in 2026, the supplement is reduced by $1 for every $2 above that limit. Only wages and self-employment income count, not TSP withdrawals or the pension itself. Unlike the Social Security earnings test, these reductions are not returned to you later.
Carrying health coverage into retirement is one of the most valuable parts of the federal package, but only if you meet the rule.
To keep FEHB in retirement you generally must be enrolled for the five years immediately before you retire, or since your first chance to enroll. Miss it and the coverage does not continue, which is difficult to reverse.
The government continues paying the larger share of the premium in retirement, but the cost still grows. FEHB premiums rose more than 12% on average in 2026, well ahead of the 2% FERS cost-of-living adjustment, so health costs claim a growing slice of income over time.
At 65 you decide how FEHB and Medicare work together. Whether to take Part B, and how the two coordinate, is a personal calculation that depends on your plan and your income, including the Medicare income surcharge known as IRMAA.
Many FERS employees fear their Social Security will be cut because they receive a federal pension. Because FERS employees pay into Social Security throughout their careers, the Windfall Elimination Provision and Government Pension Offset did not apply to them. Those provisions were also repealed for the workers they did affect under the Social Security Fairness Act. If you also have older CSRS service, your situation may differ and is worth reviewing.
Federal retirement rules are unusually active as of mid-2026. Legislation has been moving that would, among other things, increase FERS employee contribution rates and change the FERS supplement for some future retirees. Some provisions phase in over more than one year, and details can shift between the House, the Senate, and final law.
Because the specifics change, treat any figure here as a starting point and confirm the current rule for your own hire date and retirement category before making a decision. This is exactly the kind of moving target a coordinated review is meant to track.
Your benefits were designed to connect. Your plan should too.
Free, professional education for federal employees across metro Atlanta.
Browse free workshops