Many federal employees think about retirement one benefit at a time. They know they’ll receive a FERS pension. They have a balance in the Thrift Savings Plan. They have an estimate of their future Social Security benefit.
What often doesn’t happen until retirement is close is putting those three pieces together to see what their retirement income may actually look like.
Your Pension Is the Foundation
For most federal employees under FERS, the pension provides a dependable monthly income for life. But it was never intended to replace your entire paycheck.
The standard FERS formula calculates your pension using your High-3 average salary, years of creditable service, and a 1% multiplier, or 1.1% if you retire at age 62 or later with at least 20 years of service.
For someone earning $100,000 with 30 years of service, that works out to an annual pension of roughly $30,000 before deductions.
Social Security Adds Another Layer
Social Security is designed to supplement retirement income, not replace a full salary. The amount each retiree receives depends on their earnings history and when they choose to claim benefits.
Together, a FERS pension and Social Security create a solid income foundation. For many retirees, however, they still don’t replace the income earned during their working years.
The TSP Often Does the Heavy Lifting
That leaves the Thrift Savings Plan as the third major source of retirement income.
The role of the TSP isn’t simply to provide additional savings. For many retirees, it’s the account that bridges the gap between guaranteed income and the retirement lifestyle they hope to maintain.
How well it performs depends on years of contributions, investment choices, withdrawal strategy, and the amount of time those assets have to grow before retirement begins.
Looking at the Complete Picture
One additional year of federal service may increase your pension, add another year of TSP contributions and investment growth, and potentially increase your future Social Security benefit.
That’s why retirement planning isn’t just about estimating individual benefits. It’s about understanding how all of your income sources fit together and whether they support your long-term goals.
Many federal employees don’t gain that perspective until they’re on the doorstep of retirement.
A Federal Retirement Consultant (FRC®) can help you evaluate your pension, TSP, Social Security, and other retirement assets as one complete retirement income picture. Schedule your complimentary benefits review today.
