How to Work Out Your High-3 in the United States for Federal Retirement

In retirement, federal employees are paid a fixed monthly salary based on precise calculations. Income and service years are two of the most important criteria in determining the benefits of these formulas. Federal Employees Retirement System (FERS) income for the past three years is used as a baseline. Here’s how to figure out your federal retirement high-3, as well as the variables that may have an impact on it.

Having a financial advisor assist you in developing a retirement plan is an option.

How Much Do the Top 3 Earners Make?

Your federal retirement benefits are calculated using your high-3 average salary as a starting point. For most people, the three most recent years of employment are when they make their most money, but this isn’t always the case. It’s possible that your highest-earning years may not be the last three years of your employment.

How to Determine Your Federal Retirement High-3?

If you worked under the Federal Employees Retirement System (FERS) or another retirement programme, the formula for calculating your high-3 for federal retirement differs.

Participants who worked their entire career under the FERS system will find the formula for their basic annuity below.

Age 62 or more and less than 20 years of service but under 62 at the time of separation for retirement: For each year of employment, you’ll receive 1% of your highest 3-year average earnings.

Discharged after 20+ years of service and at least 62 years of age: For each year of service, you will receive 1.1 percent of your high-three average wage.

Transitioned to the FERS

Your annuity will have two parts if you transferred into the FERS after spending at least five years covered by the CSRS or Social Security. Individually, each one of these factors contributes to the sum of your financial gain.

The FERS component has been calculated.

Under the age of 62 at the time of retirement separation OR– beyond the age of 62 but with fewer than 20 years’ service: For each year of service, you’ll receive 1:
Discharged after 20+ years of service and at least 62 years of age: For each year of service, you will receive 1.1 percent of your high-3 average wage.
The CSRS component was computed.
The first five years of service: a yearly bonus of about one-half of one percent of your highest three years of earnings
5 years of CSRS service for the second time: For each year of employment, you’ll receive 1.75 percent of your highest 3-year average wage.
All CSRS employees with more than ten years of service: For each year of service, you will receive 2% of your high-3 average salary.

In a non-disability annuity, a reduction

The following are four scenarios in which your federal retirement benefits may be reduced if you are not disabled:


Premature retirement may result in lower pension payments. You will not see a reduction in benefits, however, if you have completed 30 years of service or have 20 years of service and retire at the age of 60.

The winner is the survivor

Your surviving spouse is entitled to a federal retirement annuity survivor benefit in the event of your demise. The survivor benefit is paid out of your monthly benefit unless your spouse agrees to a lower annuity. If your spouse receives a 50% survivor benefit, your annuity benefit is decreased by 10%. It’s only a 5 percent cut if their monthly benefit is 25% of yours.

The CSRS offset

Non-deduction service completed before October 1, 1982, reduces your CSRS benefit by 10% of the deposit you owe. There is no deduction if the deposit was made prior to retirement.

An alternative to the traditional annuity plan

There are some circumstances in which a reduced monthly annuity can be substituted for a lump-sum payout equivalent to your retirement contributions. Those who are not disabled but have a life-threatening illness or another critical medical condition can apply for this “alternative annuity”.

Disability Calculation for Retirement

The formula may be altered for government employees who are retiring as a result of a disability. FERS applies to you if you are 62 years of age or older when you retire or meet the age and service conditions for immediate voluntary retirement.

Although if you are under the age of 62 upon retirement or are not eligible for early retirement, a new calculation is applied:

Within the first year:

A monthly payout equal to 60% of your highest 3-month average wage less 100% of your Social Security benefit. However, if your “earned” annuity exceeds this amount, you are entitled to receive it.

After a year:

40% of your highest 3-month wage less 60% of your Social Security benefit for each month you are eligible for Social Security disability payments. However, if your “earned” annuity exceeds this amount, you are entitled to receive it.

At the age of 62:

If you had remained working until the day before your 62nd birthday and then retired under FERS, your annuity will be recalculated based on that amount.
If your total service time, including time spent as a disabled annuitant, is less than 20 years, then you should consider this option. One percent (1%) of your highest three years’ average pay.
If your total years of service, including time spent as a disability annuitant, is 20 years or more, you’ll receive 1.1 percent of your highest three years of earnings.
The period of time you have received a disability annuity will be taken into account when calculating your total service.
All FERS cost-of-living increases paid during the time you received a disability pension will be included to the Average Salary utilised in the computation.

Living Expense Adaptations

If one of the following four conditions is met, federal retirement annuities get annual cost-of-living adjustments (COLAs).

I’m 62 years old.

Firefighters, police officers, and air traffic controllers who were eligible for early retirement
Retired on disability, unless your pension is based on 60% of your highest-three-year wage average.
Retirement benefits include a part calculated in accordance with CSRS standards.

To Sum It Up

Determine if your position allows you to retire comfortably by calculating your estimated retirement income. For federal retirement, the “high-3” is the three most lucrative years of your career. The best-paying years of your career are usually the last three, but this isn’t always the case. However, there are additional things that can affect your predicted retirement income besides your high-3. Investing your remaining funds to fulfil your financial objectives will be easier now that you have calculated your high-3 for federal retirement.

How to Make a Living in Retirement?

When people decide to retire, one of the most important considerations is ensuring that they can meet their retirement income goals. Some retirees find that their pension from employment is not enough to meet all of their living expenses when they finally retire. Using our retirement calculator, you can estimate how much money you’ll need in retirement based on your current spending habits and the expected value of your retirement savings and assets.
A financial advisor’s job is to help clients plan for and secure a comfortable retirement. It doesn’t have to be difficult to find a competent financial counsellor. To help you find the perfect financial advisor, SmartAsset’s free tool pairs you with up to three local financial advisors. You can then interview each of your advisor matches for free to narrow down your options. The sooner you begin the process of finding a financial counsellor, the better.


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