FERS Annuity and Take Home Pay in Retirement

How much income can federal employees expect to have in retirement? It’s a complex question, but the author provides a basic overview of key points to consider.

“What will I bring home in retirement?” This is a question I’ve heard time and again at federal retirement trainings.

Because we cannot predict the future, this can be a tricky question to answer. I can’t tell you exactly what amount you will clear in retirement, but I can give you some tools to help you get an idea of what that number may be through discussion of the FERS annuity and other sources of retirement income for federal employees.

Start With Your Pension

If you know what your FERS pension will be, then great. You already have one of the three legs of your retirement stool figured out.

If not, I recommend taking advantage of this FERS Calculator. This is a great tool that can give you an estimate of what your FERS annuity may be in retirement.

The FERS pension is a significant source of income for federal retirees. Calculating your bring home pay in retirement and not including your pension is like trying to eat soup with a fork. It just doesn’t make sense.

When will you take Social Security?

If you are eligible for a benefit from Social Security, when will you begin to draw it?

Social Security can be accessed as early as age 62 or as late as 70. Every year you delay drawing Social Security adds a percentage to your benefit. If you don’t know what your benefit will be, visit SSA.gov to access your account or use SSA’s free Social Security calculator.

If you’re planning on drawing Social Security immediately upon retiring, be sure to include this in your bring home pay calculation. If you will draw the Special Retirement Supplement before you become eligible to receive Social Security, that will be an important note to make. 

Don’t forget the TSP

As a FERS employee, you’ve probably been contributing to the Thrift Savings Plan (TSP) for years. We call these years of building the TSP the accumulation phase.

In retirement, you enter the distribution phase in which you begin to take money out of the TSP.

There are several options available to access your TSP. Your TSP is the last leg of your retirement stool, but not one that should be overlooked in retirement planning.

Other sources of income

Do you have an IRA, rental properties, or perhaps a large pile of gold tucked away in your closet? Any or all of these may be a significant part of your retirement income.

If you have a military or state employment pension, don’t forget to include these important items. 

To calculate how much you will clear in retirement, you need to know how much money you will have coming in and how much you will have going out.

We’ve done the fun part of this – tallying up the money you will have coming in. Let’s turn to the less pleasant segment – calculating your expenses.


This is where you add up the benefits from federal service that will be deducted from your FERS annuity. Federal Employees Health Benefits (FEHB), Federal Employees Group Life Insurance FEGLI, and the survivor benefit can all reduce your pension amount. I would encourage you to take a moment to consider what each of these will cost you in retirement. You do have options, so it is beneficial to familiarize yourself with them.


All three legs of your retirement stool can be affected by taxes. Because of the three legs of your retirement stool, you may not actually be in a lower tax bracket in retirement. Even so, you do have ways to limit your tax burden in retirement.

For example, Roth accounts are taxed when you make contributions, but generally not when you take distributions. I recommend that you see a financial professional to get an accurate estimate of what your tax burden will be in retirement.

What else?

Mortgage obligations, car payments, and credit card debt don’t simply vanish once you cease to work. There are many other expenses you may not be thinking about now. Take time to total the seemingly small expenditures of life. Chances are that these will be waiting to greet you when you leave federal employment behind.

The question I opened with was, “What will I bring home in retirement?”

As you can see, this is a loaded question; however, it’s an immensely important one to ask. I hope you take the time to ask this question and seek out the answer. Doing so will allow you to move toward retirement with peace and confidence to do what needs to be done.

Disclosure: The information contained in these blogs should not be used in any actual transaction without the advice and guidance of a tax or financial professional who is familiar with all the relevant facts. The information contained here is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for the individuals’ specific circumstances or needs and may require consideration of other matters. RBI is not a broker-dealer, investment advisory firm, insurance company, or agency and does not provide investment or insurance-related advice or recommendations. Brandon Christy, President of RBI, is also president of Christy Capital Management, Inc. (CCM), a registered investment advisor.

About the Author

Brandon Christy, CPA, PFS, is the founder and president of Retirement Benefits Institute, Inc. He is an established leader in contracted federal retirement benefits education, and his company has trained over 10,000 federal employees to help them gain clarity and confidence in retirement.