The Federal Employee Retirement System (FERS) was created by the federal government to support its employees in retirement. The system is actually built upon three separate retirement benefits, which combine to provide income for retired federal employees.
The first leg of FERS is the pension program. Each pay period, a portion of your check is withheld to fund your future pension. For most employees, the amount withheld is 0.8 percent of basic pay (excluding any overtime). The FERS pension is a defined benefit plan, meaning that the amount of money you receive in retirement will be fixed. The exact amount that you will receive is based upon a complicated formula, which you should discuss with your financial advisor to be sure you know what to expect in retirement.
The second leg of the FERS program is your Social Security benefits. Like any other American citizen, you will pay into the Social Security program throughout your career. When you reach retirement age and claim your benefits, the amount you receive will be based upon your past earnings and the age at which you file for benefits.
The third leg of the FERS program is the Thrift Savings Plan. The TSP is a special retirement account created specifically for federal employees. The amount you receive in retirement will depend largely upon how much you contributed and how well you managed the money in your account. Many federal employees are eligible for employer-matched contributions, so it’s important to take advantage of those if you can.
As a federal employee, you have three opportunities for retirement income. But as you can see, correct management of your resources will be important to securing financial freedom in retirement. Consult regularly with your financial advisor to make sure your savings strategy is on track with your goals.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
14639 – 2015/6/30Read More