For federal employees planning to retire in the Sunshine State, understanding your Federal Employees Retirement System (FERS) pension is one of the most important steps in securing a comfortable, worry-free future. At United Benefits, we specialize in helping federal workers maximize their retirement income and make informed decisions about their benefits. Florida’s low taxes, warm climate, and growing retiree communities make it a top destination for FERS retirees. But before you plan your next move, you’ll want to know how your “high-3” salary and years of service determine your FERS annuity—and what strategies can boost your lifetime pension.
Understanding the FERS Pension System
The FERS pension is one of the three pillars of retirement income available to federal workers, alongside Social Security and the Thrift Savings Plan (TSP). Your FERS pension is a guaranteed lifetime benefit that rewards years of federal service. It’s calculated based on your “high-3” average salary and your total creditable service years, which together determine your retirement annuity.
How Your High-3 Salary Works
Your “high-3” is the average of your highest-paid consecutive 36 months of basic pay. This usually occurs in the last three years of employment, though it can fall earlier if you received temporary promotions or changed roles. Basic pay includes locality pay but excludes overtime, bonuses, and other non-base pay earnings.
For example, if your high-3 pay averaged $90,000 per year, that figure becomes the foundation for your FERS annuity formula. Since small changes in this number can have a large impact on your pension, many employees strategically time promotions or extended service years to boost their high-3 before retiring.
The Role of Years of Creditable Service
Your years of credible federal service are multiplied by a pension factor to determine your final annuity. The standard FERS formula for regular employees is:
- 1% x High-3 Average Salary x Years of Creditable Service
If you retire at age 62 or later with at least 20 years of service, that multiplier increases to 1.1%. That extra tenth of a percent may sound small, but it can significantly increase your lifetime earnings, especially for retirees with higher high-3 averages.
For instance, an employee who retires at 62 with a $90,000 high-3 and 25 years of service would receive an annuity equal to 1.1% x $90,000 x 25 = $24,750 per year—before applying any deductions for survivor benefits or taxes.
How Florida Benefits FERS Retirees
Florida remains one of the most tax-friendly states for retirees. It doesn’t tax Social Security benefits, pensions, or income from the FERS annuity. According to the Tax Foundation, Florida is one of only nine U.S. states with no state income tax, allowing federal retirees to keep more of what they’ve earned. Combined with a relatively low cost of living compared to other coastal states, Florida offers an ideal location for maximizing the value of your FERS retirement income.
Retirees also enjoy access to excellent healthcare options and large communities of former federal employees. Whether you settle in Jacksonville, Tampa, or near the Gulf Coast, Florida offers both financial and lifestyle benefits for FERS pensioners.
Boosting Your FERS Pension Before Retirement
Federal employees nearing retirement can take specific actions to enhance their annuity:
- Lengthen your service: Every additional year (or even month) of service increases your total benefit and could boost your eligibility multiplier if you reach the 62/20 benchmark.
- Optimize your high-3: Seek promotions or accept details that increase your base pay during your last few years of service.
- Use the FERS Calculator: To estimate your pension more accurately, try our FERS calculator. It helps you project your monthly annuity and explore how timing your retirement can impact your payout.
- Consider survivor benefits: While electing survivor benefits reduces your initial annuity, it can provide invaluable security for your spouse. Balancing your election decisions ensures peace of mind for both you and your loved ones.
- Plan your withdrawal strategy: Your TSP and Social Security benefits work in tandem with FERS. Managing when to claim each income stream can reduce taxes and extend your savings.
Common FERS Retirement Scenarios
Most regular federal employees can retire under FERS with full benefits at their Minimum Retirement Age (MRA) plus 30 years of service, at age 60 with 20 years, or at age 62 with at least 5 years. Law enforcement officers, firefighters, and air traffic controllers have different eligibility rules with more generous formulas.
Partial or deferred retirement options are also available. For example, an employee who leaves before full eligibility can still receive a deferred annuity starting at age 62. Understanding these options ensures you choose the path that aligns with your lifestyle and income needs.
Cost-of-Living Adjustments (COLA)
FERS provides cost-of-living adjustments to protect retirees against inflation, though they are slightly lower than those in the older Civil Service Retirement System (CSRS). According to the U.S. Office of Personnel Management (OPM), if inflation rises by 3%, FERS retirees typically receive a 2% COLA. These adjustments help sustain purchasing power, especially important for long retirements in inflationary environments.
Strategizing FERS Retirement in Florida
Because Florida offers no state income tax and a favorable cost-of-living index, your FERS pension goes further here than in many other states. If you are relocating, consider consulting a benefits specialist at United Benefits to explore how moving to Florida may affect your federal healthcare and FEHB coverage—especially since some out-of-state medical plans change terms once you move.
Furthermore, federal retirees living in Florida can take advantage of property tax exemptions, such as the Homestead Exemption, to reduce annual property costs. By combining these financial advantages with proper pension planning, retirees can enjoy higher net income throughout their retirement years.
When to Seek Professional Guidance
FERS retirement planning involves more than just your high-3 and service years. Factors like survivor benefits, military service deposits, the FERS Supplement, and your TSP withdrawals all influence your total income. Professional guidance ensures that you don’t overlook critical details that could impact your lifetime annuity.
Our retirement experts at United Benefits have decades of combined experience helping federal employees transition smoothly into retirement. We can help you evaluate early-out offers, refund situations, and the impact of unused leave on your pension payout. Our goal is to help every client develop a personalized strategy that maximizes benefits and minimizes financial surprises.
Contact United Benefits
Whether you’re preparing to retire soon or simply starting to plan ahead, we’re here to help you make the most of your FERS pension in Florida. Our team can walk you through your calculations, assess relocation advantages, and build a customized roadmap to strengthen your financial future.
Contact us today at 866-558-2121 or visit us at 3295 County Road 47, Florence, AL 35630. You can also explore tools and guides at https://unitedbenefits.com/ to start your FERS retirement planning journey.
Understanding your FERS pension is the key to a secure retirement. By learning how your high-3 and service years shape your annuity—and taking proactive steps to enhance them—you can enjoy the full rewards of your federal career under the sunny skies of Florida.