How to Get the Biggest FERS Pension Possible

I spoke to a federal employee last week who just attended a 55-years-of-service party for a coworker.

55 years of service!!

I almost couldn’t believe it. 

I didn’t know if I should be impressed or just feel sorry for the guy. 

After all, once he does retire, this guy would probably have a massive pension.

But how long will he be able to enjoy that big pension?

Was it worth it?

The Easier Way

There are many ways to increase your FERS pension, one of which includes working longer. 

But for all of us, even if we love what we do, there comes a time when enough is enough. 

So if you don’t want to work 55 years with the government here are some other things you can do. 

Increase What Goes In

There are 3 things that can increase the size of your pension. 

Increase Your:

1. High-3 Salary

2. Multiplier

3. Years of Service

If you want an in depth guide into how your pension is calculated you can check out this article. 

Here are some thoughts on increasing all 3. 

High-3

Put simply, your high-3 is your highest average salary during 36 consecutive months of your career. 

For many people, their high-3 comes from the last 3 years of their career because that is when they got paid the most. 

That being said, it is important to know that it doesn’t have to be the last 3 years of your career. Your high-3 will automatically be the 3 years that you had the highest pay regardless of when it occurred in your career.

Unfortunately, to calculate your high-3, not all types of pay are included. The type of pay this is included is called basic pay. 

Basic pay includes only the following:

-Your Base Salary

-Shift Rates

-Locality Pay

So there are two main ways to increase your high-3. 

You can take a higher paying position or you can move to a higher cost of living area where your locality pay would also be higher. 

I have seen many federal employees take a California position for 3 years to lock in their high-3 and then they move to a lower cost of living area in retirement. 

Multiplier

Your multiplier will be 1% unless you retire at age 62 or older with at least 20 years of service, at which point your multiplier would be 1.1% (a 10% raise!). 

This bump in pension is often the incentive that many feds need to work just a bit longer. Do the math for your own pension to see what would happen if you worked until age 62 and 20 years of service.

Years of Service

There are two ways to increase your years of service. 

1. You can work longer

2. You can save up sick leave

Any unused sick leave you have at retirement is added into your years of service when calculating your pension. 

So the more you have saved at retirement, the bigger your pension. 

This chart shows you how years/months/days your sick leave may be worth to you. 

Decrease What Comes Out

The next thing you can do to increase your net pension is to decrease what comes out of your pension. 

In retirement, here are the things that could come out of your pension depending on your situation and what you elect to take into retirement. 

-Survivor Benefits

-FEHB (Health Insurance) Premiums

-FEGLI (Life Insurance) Premiums

-FEDVIP (Dental/Vision Insurance) Premiums

-LTC (Long Term Care Insurance) Premiums

-Taxes

Now I am not saying you should cancel any of these things just to increase your pension. 

Some of these deductions are 100% worth paying for. 

But you do want to make sure you aren’t paying for something you simply don’t need. 

These articles should help:

Here is an article walking you through what you should do for survivor benefits. 

Here is an article about what to do with FEGLI. 

This article talks through if you need long term care insurance. 

This article will show you how to lower taxes in retirement.