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What Working Part Time Does to Your Retirement

How does part time work impact your retirement under FERS?

Many federal employees work in a part-time FERS position either at the beginning, the end, or even in sometime in the middle of their career. If this is you, it is essential that you know how this part-time service will affect your ability to retire and how big your pension will be.

And before I get too far, I want to remind my readers that I am focusing on those in a permanent position under the new Federal Employees Retirement System (FERS). If you are under the Civil Service Retirement System (CSRS) or in a temporary position (one that doesn’t pay into the retirement system) then the rules will be different for you.

What is it?

The first question we should address is what counts as part-time service. 

The good news is that the definition is simple. It is basically any time that you worked less than 40 hours per week. 

When Can I Retire?

To be eligible to retire with an immediate retirement, FERS employees must meet one of the following:

  • Age 62 and 5 years of service
  • Age 60 and 20 years of service
  • Minimum Retirement Age (Between age 55-57) and 30 years of service. 

The good news is that for retirement eligibility purposes, it does not matter if your years of service are full-time or part-time. 

For example, if you are 60 years old and have 10 years of full-time service and 10 years when you only worked 20 hours a week (part-time service), you are still eligible to retire with an immediate retirement.

This is good news for all the part-timers out there. 

But Watch Out

The big ‘gotcha’ for part-time service however is when we start talking about how your pension will be calculated when you retire.

For all FERS employees, your pension calculation starts with the following equation:

Years of Creditable Service   x   High-3 Salary   x   Multiplier  =  Gross Annual Pension

However, if you had part-time service during your career, the calculation doesn’t stop there. Your gross annual pension is prorated depending on how much part-time service you had. The proration looks like this:

(Actual Hours Worked During Career)  / 

(Potential Hours if you would have been full-time your whole career)   x  (Gross Annual Pension)

As an easy example, if you had 90 hours of work during your career but you would have had 100 if you would have been full-time the whole time, then your equation would look like this:

90 / 100 = 90%

90% x (Gross Annual Pension)

In this example, you would receive only 90% of your pension because of your part-time service. 

Final Note

I have one more piece of good news for those part-timers out there. For your pension calculation, your high-3 salary will be what you would have been paid if you were full-time. 

For example, let’s say that the last 3 years of your career you took a part-time FERS position. During that time, you only worked 20 hours a week and were paid $50,000 each year. That would mean that your high-3 would be $100,000 (assuming you didn’t have a salary higher than that earlier in your career) because that is what you would have been paid if you would have been full-time. 

About the Author

Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.