2025 Guide for Federal Employee Retirement Benefits from Fiduciary Financial Planners
The new year is just around the corner, which means many things for the federal workforce. A good portion of federal employees are very likely retiring on December 31 as it is generally considered the best date for federal employees to retire. 2025 federal pay raise.
COLA for FERS, CSRS, and Social Security
The cost-of-living adjustment for Social Security and federal retirees receiving a CSRS (Civil Service Retirement System) pension will 2.5% for 2025. For FERS (federal employee retirement system) annuitant, this means a 2025 COLA of 2.0%.
CSRS
FERS
2023 COLA
8.7%
7.7%
2024 COLA
3.2%
2.2%
2025 COLA
2.5%
2.0%
Learn how FERS, Social Security, and TSP work at a Free FERS Retirement Webinar!
2025 Federal Pay Raise for Military and Civilian Employees
The 2025 pay raise for military personnel . The federal pay raise for civilian employees was just finalized today at 2.0% despite a last ditch effort for 4.5%.
Military
Civilian
2023 Pay Raise
4.6%
4.6%
2024 Pay Raise
5.2%
5.2%
2025 Pay Raise
4.5%
2.0%
2025 TSP Contribution Limits and Catch-Up Amounts
The Thrift Savings Plan (TSP) contribution limits for the 2025 tax year will be $23,500 for all employees. The normal catch-up amounts, for those age 50 or older, will remain at $7500. Unlike previous years, though, federal employees between the ages of 60 and 63 can contribute $11,250
2025 TSP Secure 2.0 Catch Up Contributions
Age
Contribution Limit
TSP Catch-Up Contributions
Total TSP Contribution Limit (2025)
Younger than 50
$23,500
Not Eligible
$23,500
50 and Older
$23,500
$7500
$31,000
60 to 63
$23,500
$11,250
$34,750
64 and Older
$23,500
$7500
$31,000
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Want to know how much your TSP balance will be at retirement? Check out the TSP Calculator
Federal and Postal Health Benefit Premium Increases for 2025
The Federal Employee Health Benefits (FEHB) program will see a premium increase of 13.5%
2025 Average Premium Increase
FEHB
13.5%
PSHB (Postal Service)
11.1%
FEDVIP, Vision
0.87%
FEDVIP, Dental
2.97%
Healthcare costs are rising each year and the increase in premiums reflects this reality. Planning for health expenses in retirement is a crucial factor to consider when developing a retirement plan under FERS. As for life insurance, the cost of FEGLI (Federal Employee Group Life Insurance) premiums have not increased since October of 2021.
FLTCIP to Stay Suspended Until December 2026
In 2022, the Federal Long Term Care Insurance Program (FLTCIP) stopped accepting new applications for long-term care policies. Earlier this month, OPM extended the suspension until at least December 19, 2026.
FERS Annuity Calculator: Estimate Your Federal Employee Retirement
Utilizing tools likethe FERS annuity calculator
What is Computation for Federal Retirement Benefit?
Annuity computation under both FERS and CSRS involves calculating the benefit amount based on your high-3 average salary and years of creditable service. For FERS, the annuity is typically 1% of your high-3 average salary multiplied by your years of service, or 1.1% if you retire at age 62 or older with at least 20 years of service. CSRS annuity computation is more generous, generally calculated as 1.5% of your high-3 average salary for the first five years, 1.75% for the next five years, and 2% for each year thereafter. Understanding these formulas is essential for estimating your retirement benefits accurately.
Information to Get Started Calculating Your FERS Pension
Key details include your high-3 average salary, years of creditable service, and your expected retirement age. Additionally, you should have information about any unused sick leave, as this can be converted into additional service time under certain conditions. Gathering this information beforehand will ensure a more accurate estimate of your retirement benefits.
Your High-3 Average Salary is Used to Calculate Benefit Amount
Your high-3 average salary is a critical component in calculating your annuity. It is the highest average basic pay you earned during any three consecutive years of service. To input this into the calculator, you need to identify the period where your salary was highest and calculate the average. This figure is then used in the annuity computation formula to determine your benefit amount. Ensuring accuracy in this step is vital, as even small discrepancies can significantly impact your estimated retirement benefits.
Length of Service, Sick Leave, and Military Deposits
Calculating your creditable service involves determining the total years and months you have worked as a federal employee. This includes any periods of military service, which can be credited towards your retirement if you make a deposit for that time. Additionally, unused sick leave can be converted into creditable service, potentially increasing your annuity, but unused sick leave cannot be used for eligibility. If you have less than 20 years of service, and your basic annuity is computed with a factor of 20 years because of sick leave, you will not be eligible for the extra 1.1% multiplier (if retiring at age 62 or older). The Office of Personnel Management (OPM) provides guidelines on how to calculate this time, ensuring you receive the full benefit of your service.
How to Plan for Retirement from Federal Service
The best way to start planning for retirement as an employee of the federal government is to attend a free retirement workshop request a FERS retirement system benefit estimate report . the best fiduciary advisors for federal employees
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How Can Financial Advisors Assist in Retirement Planning?
Financial advisors can play a vital role in retirement planning for federal employees. They offer expert guidance on maximizing your retirement benefits, managing your TSP, and making informed decisions about your annuity and survivor benefits. Advisors can also help you navigate the complexities of the federal retirement system, ensuring you understand your options and make the best choices for your financial future. Engaging with a knowledgeable advisor can provide peace of mind and confidence as you approach retirement.
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