For Federal Employees in Fredericksburg, VA

FERS Retirement: A Plain-English Overview

How a federal employee's retirement works under the Federal Employees Retirement System (FERS), with sample numbers for each option.

Fredericksburg sits in the middle of federal country — close to Quantico, Fort A.P. Hill and the I-95 commute into Washington, D.C. — and home to a lot of federal employees and retirees across Fredericksburg, Stafford and Spotsylvania. If that's you, your retirement doesn't run through a typical 401(k) — it runs through FERS, Social Security and the Thrift Savings Plan. This guide walks through how those pieces fit together, in plain English.

Figures current as of October 30, 2026. All examples are hypothetical and rounded. Confirm your own numbers with your agency HR office and an official OPM annuity estimate before making any final decision.

The Big Picture: Three Parts of FERS

FERS is a “three-legged stool”:

LegWhat it isWho pays
1. FERS Basic Annuity (pension)A lifetime monthly check based on salary and years of serviceEmployee pays 0.8%, 3.1%, or 4.4% of pay depending on hire date; agency pays the rest (Federal News Network)
2. Social SecuritySame Social Security as private-sector workersRegular payroll tax
3. Thrift Savings Plan (TSP)A 401(k)-style accountEmployee contributions plus agency 1% automatic contribution and matching (TSP)

Some employees also get the FERS Supplement, a temporary “bridge” payment for people who retire before 62. It’s covered below.

No 2025–2026 law changes to the pension. The House proposed eliminating the FERS Supplement and moving to a “High-5” salary average in 2025. Neither proposal made it into the law that was signed. The pension is still based on the High-3, and contribution rates haven’t changed (Q3 Advisors; CRS). Congress could bring these proposals back in a future budget bill.

When Can You Retire? (Eligibility)

Minimum Retirement Age (MRA)

Birth yearMRA
1953–196456
196556 and 2 months
196656 and 4 months
196756 and 6 months
196856 and 8 months
196956 and 10 months
1970 and after57

Source: OPM Eligibility

The Retirement Types

TypeAge + service neededPension reduced?Supplement?Keep health and life insurance?
Immediate, fullMRA + 30 yrsNoYesYes (if the 5-year rule is met)
Immediate, fullAge 60 + 20 yrsNoYesYes
Immediate, fullAge 62 + 5 yrsNoNo (already 62)Yes
MRA+10MRA + 10–29 yrsYes, 5% per year under 62, unless postponedNoYes, once the annuity starts
Early-out (VERA) / Discontinued Service (DSR)Age 50 + 20 yrs, or any age + 25 yrsNo age penaltyYes, but not until MRAYes
DeferredLeft federal service with 5+ yrs, collects laterDepends on age and serviceNoNo. FEHB and FEGLI are lost
Disability18 months of service and medically unable to do the jobSpecial formulaNoYes

Source: OPM Eligibility, OPM Computation, Wells Fargo FERS Guide

Not sure which path fits you?

MRA, 60, or 62 each change your pension percentage, your supplement, and your health coverage. Let's map your options against your own service record.

The Pension Formula

Pension = High-3 salary × Years of service × Multiplier

High-3: The highest average basic pay over any 3 consecutive years. Overtime and bonuses don’t count (OPM).

Multiplier:

  • 1.0% if you retire before 62, or at 62+ with less than 20 years
  • 1.1% if you retire at 62 or later with 20+ years. This is a 10% raise just for waiting.
  • 1.7% for the first 20 years, then 1%, for law enforcement, firefighters, and air traffic controllers (OPM)

Sample Pension Projections — all scenarios assume a $100,000 High-3

ScenarioFormulaAnnual pensionMonthlyPlus FERS Supplement?
A. Retire at 57 (MRA) with 30 yrs1% × 30 × $100k$30,000$2,500Yes, until 62
B. Retire at 60 with 20 yrs1% × 20 × $100k$20,000$1,667Yes, until 62
C. Retire at 62 with 20 yrs1.1% × 20 × $100k$22,000$1,833No
D. Retire at 62 with 30 yrs1.1% × 30 × $100k$33,000$2,750No
E. MRA+10: age 57 with 15 yrs, start now1% × 15 × $100k, minus 25%$11,250$938No
E2. Same person, postpones to 621% × 15 × $100k, no penalty$15,000$1,250No

These are amounts before the survivor benefit reduction, health premiums, and taxes.

Planning note on pay: The 2027 General Schedule pay plan freezes base and locality pay, which slows High-3 growth for people retiring in 2027–2028 (MyFederalRetirement).

The FERS Supplement (Bridge to 62)

What it is: A temporary monthly payment that stands in for the Social Security benefit you earned during federal service. It covers the gap until Social Security can start at 62.

Formula: (Years of FERS service ÷ 40) × Estimated Social Security benefit at 62 (Wells Fargo FERS Guide)

ScenarioEst. Social Security at 62CalculationMonthly supplement
A. 30 yrs at 57$2,000/mo30/40 × $2,000$1,500
B. 20 yrs at 60$2,000/mo20/40 × $2,000$1,000

What to know:

  • It stops at 62 whether or not you claim Social Security, and it never gets a COLA (MyFederalRetirement).
  • There’s an earnings test. If you earn wages or self-employment income after reaching MRA, the supplement drops by $1 for every $2 you earn over the limit. The limit is $24,480 in 2026 (OPM BAL 26-101) and $25,560 in 2027 (FedTools).
  • Pensions, TSP withdrawals, rental income, and investment income don’t count toward the earnings test (FFEBA).
Example: Earn $40,000 at a part-time job in 2026. ($40,000 − $24,480) ÷ 2 = $7,760/year lost from the supplement (Warrior Retirement).

Cost-of-Living Adjustments (COLA)

2027 FERS COLA: 2.6%. Social Security and CSRS get 3.6% (OPM). Regular FERS retirees get no COLA until age 62. Disability retirees, survivors, and special-provision retirees (law enforcement, firefighters, air traffic controllers) get it at any age (FFEBA).

The “diet COLA” rule (CRS):

Inflation (CPI-W)FERS COLA
2% or lessFull inflation
2%–3%Flat 2%
Over 3%Inflation minus 1%

Example: A $27,000 pension (Scenario A after the survivor reduction) grows by about $702/year once the retiree is 62+.

Survivor Benefit Options

This is one of the most important decisions, and it is very hard to undo after the first 30 days (OPM RI 90-8).

ChoiceCost to retireeSpouse receives after retiree's deathSpouse consent needed?
Full survivor (default if married)10% of pension50% of unreduced pension, for lifeNo
Partial survivor5% of pension25% of unreduced pensionYes, notarized
None0%$0Yes, notarized

Source: OPM Survivor Benefits

Example with Scenario A ($30,000 pension):

ChoiceRetiree getsSurviving spouse gets
Full$27,000/yr$15,000/yr + COLAs
Partial$28,500/yr$7,500/yr + COLAs
None$30,000/yr$0

Why it matters beyond income: A spouse can keep FEHB health coverage after the retiree dies only if they receive a survivor annuity. Many couples choose the partial option just to protect the spouse’s health insurance (Government Executive).

Planning angle: Compare the lifetime cost of the 10% reduction with private life insurance or annuity alternatives. Don’t use a private policy to replace the survivor benefit entirely unless the spouse’s health coverage is protected some other way.

Survivor benefit decisions are hard to undo

You generally have 30 days after retirement to lock this in. Let's talk through full, partial, or none — and what it means for your spouse's health coverage.

Life Insurance (FEGLI)

The Four Coverage Pieces

BasicOption AOption BOption C (family)
AmountSalary rounded up to the next $1,000, + $2,000Flat $10,0001–5 × salarySpouse $5,000 and each child $2,500, per multiple (up to 5)
CostEmployee pays $0.16 per $1,000 biweekly; government pays 1/3 (FFEBA)Age-based; $6.00 biweekly at 60+Age-based per $1,000; climbs steeply after 60Age-based per multiple

Source: OPM FEGLI Premiums, FedTools

To keep FEGLI in retirement, you generally need to retire on an immediate annuity and have been covered for the 5 years before retiring (Federal News Network).

Basic Life in Retirement: Three Choices — example: $100,000 salary gives $102,000 of Basic coverage

ChoiceWhat happens to coverageMonthly cost before 65Monthly cost after 65
75% ReductionDrops 2%/month starting at 65 until it reaches $25,500$35.36Free
50% ReductionDrops 1%/month until it reaches $51,000$111.86$76.50 for life
No ReductionStays at $102,000$264.86$229.50 for life

Rates: OPM FEGLI Premiums for Annuitants. You can switch from 50% or No Reduction down to 75% later, but you can never move back up (OPM).

Options A, B, and C in Retirement

  • Option A: Free after 65 and shrinks 2%/month to $2,500 (MyFederalRetirement).
  • Options B and C: For each multiple, choose “Full Reduction” (free after 65 and shrinks to zero) or “No Reduction” (keep paying age-based premiums for life) (OPM Guide).
  • Cost example: $300,000 of Option B with No Reduction costs about $312/month at 65–69, $1,170/month at 75–79, and $1,872/month at 80+ (MyFederalRetirement).
Planning angle: FEGLI is cheap while you’re young and expensive as you age. For anyone 55+, compare Option B with private term or permanent life insurance, ideally while still healthy. If you plan to drop FEGLI, put the private coverage in place first. Once you cancel FEGLI in retirement, you can’t get it back.

Sick & Annual Leave

Sick Leave

It is not paid out in cash. Unused sick leave is added to your service time in the pension formula instead (OPM). FERS gives 100% credit for anyone retiring on or after January 1, 2014 (OPM FAQ).

Conversion: 2,087 hours = 1 year, and about 174 hours = 1 month (FEDweek). Sick leave raises the pension amount, but it can’t help you qualify to retire (for example, it can’t get you to 30 years) and it doesn’t raise the High-3 (FFEBA). It does count toward the 20 years needed for the 1.1% multiplier at 62 (NARFE). Deferred retirements get no sick leave credit (NARFE).

Example: 1,044 hours of sick leave is about 6 months of extra credit. At a $100,000 High-3 and 1%, that adds about $500/year for life, or $550/year at 1.1%.

Annual (Vacation) Leave

Paid out as a lump sum at your final hourly rate when you retire (OPM). Taxed as income (federal, state, FICA), but no retirement or TSP deductions are taken out (NARFE). It usually arrives several weeks after you retire (U.S. Fish and Wildlife Service).

Carryover cap: usually 240 hours. Anything above that is “use-or-lose” at the end of the leave year. The 2026 leave year ends January 9, 2027 (Federal News Network). Accrual is 4, 6, or 8 hours per pay period depending on years of service (Federal News Network).

Example: 240 hours × $47.92/hour ($100,000 ÷ 2,087) = about $11,500 before taxes.

Strategy: Retiring just before the leave year ends lets you cash out hours that would otherwise be forfeited. Use sick leave for genuine needs, but bank annual leave, since it pays out at full cash value. For comparison, 336 hours of sick leave is worth only about $83/year in pension on a $50,000 salary (Government Executive).

Health Insurance (FEHB / PSHB)

  • The 5-year rule: to keep FEHB in retirement, you must have been enrolled for the 5 years right before retiring (or since your first chance to enroll) and retire on an immediate annuity. MRA+10 counts (OPM).
  • Same premiums as active employees, paid monthly. Retirees can’t pay premiums pre-tax (FEDweek).
  • Medicare at 65: for FEHB enrollees, Part B is optional. Medicare becomes primary and FEHB becomes secondary. Postal retirees generally must enroll in Part B to keep PSHB coverage (Federal News Network).
  • Suspend, don’t cancel. Canceling FEHB is permanent. Suspending it (for example, to use Medicare Advantage or TRICARE for Life) keeps the right to return (Government Executive).
  • 2027 Open Season: November 9 – December 14, 2026 (Federal News Network).

Thrift Savings Plan (TSP)

Limit20262027 (expected; IRS notice pending)
Employee contribution$24,500$25,500
Catch-up (age 50+)$8,000$8,500
Higher catch-up (turning 60–63)$11,250$11,750

Source: Government Executive, FedTools

  • Free money: contribute at least 5% to get the full agency match (1% automatic + up to 4% matching) (TSP).
  • New Roth catch-up rule: starting in 2026, people who earned more than $145,000 in the prior year must make catch-up contributions as Roth (GSA).
  • In retirement: you can leave the money in TSP, take installments, buy a TSP life annuity, take partial lump sums, or roll it to an IRA. TSP withdrawals don’t reduce the FERS Supplement (FedTools).

Other Options to Know About

Military Service Buyback

Pay 3% of military basic pay to add your active-duty years to the FERS pension (OPM Service Credit). It must be paid in full before you retire. Start at least 6 months ahead (DFAS). There’s no interest if you pay within the first 2 years of civilian service; after that, interest builds (USGS). Military retirees usually must waive military retired pay for the years to count (Transportation.gov).

This is usually one of the best deals in FERS. 4 years of buyback at a $100k High-3 adds about $4,000–$4,400/year for life.

Civilian Deposits

Some service without retirement deductions (for example, temporary jobs) can be bought back for about 1.3% of salary plus interest (OPM).

Long-Term Care (FLTCIP)

Closed to new applicants since December 2022. The current suspension runs to about December 2026 unless OPM extends it. Existing enrollees keep their coverage (LTCFEDS). Most people will need private long-term care or hybrid life/LTC coverage.

Dental/Vision (FEDVIP) and FSAs

FEDVIP continues into retirement (retiree pays the full premium). FSAFEDS is for active employees only (FFEBA).

Getting Married After Retirement

You have 2 years to elect a survivor benefit for a new spouse. It costs the normal reduction plus an extra actuarial reduction (OPM).

Complete Projection: One Example Employee

Profile: age 57 (born 1969 or later), 30 years of service, $100,000 High-3, married, 1,044 hours sick leave, 240 hours annual leave, $2,000/mo estimated Social Security at 62.

ItemAmount
Pension: 1% × 30.5 yrs (with sick leave) × $100k$30,500/yr
Less full survivor reduction (10%)−$3,050
Net pension$27,450/yr ($2,288/mo)
FERS Supplement until 62 (30/40 × $2,000)$1,500/mo
Total monthly income, ages 57–62about $3,788/mo (before FEHB, FEGLI, and taxes)
Annual leave cash-out (one time)about $11,500
Spouse's survivor benefit if retiree dies$15,250/yr (50% of $30,500) + COLAs + FEHB continues
Basic FEGLI (75% reduction)$35.36/mo to 65, then free; coverage shrinks to $25,500

At 62: supplement ends, Social Security starts (or delay for a larger benefit), COLAs begin.

What waiting to 62 would do: At 62, the same person would have 35+ years at 1.1% and a pension of about $38,500/yr or more. They’d give up 5 years of pension and supplement checks in exchange.

Key Decisions Checklist

  1. Retirement date: MRA, 60, or 62? Weigh 1% vs. 1.1%, the supplement, and annual leave timing.
  2. Survivor benefit: full, partial, or none? Consider the spouse’s health coverage.
  3. FEGLI: 75%, 50%, or No Reduction on Basic; whether to keep Option B or C; compare with private coverage.
  4. FEHB: confirm the 5-year rule is met; plan how it works with Medicare at 65.
  5. Leave strategy: bank annual leave; know the year-end cutoff.
  6. Service credit: pay any military or civilian deposits before retiring.
  7. TSP: withdrawal method, Roth vs. traditional, rollover options.
  8. Social Security: when to claim (62 vs. full retirement age vs. 70).
  9. Working after retirement: watch the supplement earnings test if you’ll earn wages.
  10. Long-term care: FLTCIP is closed; look at private coverage.

Before deciding: get an official annuity estimate from your agency HR office and review the OPM survivor and FEGLI calculators.

Schedule Your Free FERS Retirement Review

Talk through your own numbers — pension, supplement, survivor benefit, FEGLI, FEHB and TSP — with The Retirement Smith in Fredericksburg, VA. Pick a time below.

This guide is for general information and planning only and is not tax, legal, or individualized investment advice. Benefit rules and figures change. Verify everything with OPM, the employing agency, and the TSP.