How to Calculate Your High Three for Federal Retirement
Understanding your federal retirement benefits is crucial for ensuring a comfortable and secure retirement. One of the key components of these benefits is the High Three calculation. This article will guide you through the process of calculating your High Three for federal retirement, helping you to better understand your financial future.
What is the High Three?
The High Three is a formula used to calculate the annuity for federal employees who have at least 20 years of creditable service and are retiring under the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). The formula takes into account the highest three consecutive years of your salary, multiplied by a percentage, to determine your annuity amount.
Calculating the High Three for CSRS Employees
To calculate your High Three for CSRS employees, follow these steps:
1. Identify your highest three consecutive years of service.
2. Determine your highest salary during those three years.
3. Multiply your highest salary by 1.7 percent for each year of service.
4. Add the results together to get your High Three annuity amount.
For example, if your highest three consecutive years of service were 2018, 2019, and 2020, and your highest salary during those years was $100,000, your High Three annuity would be calculated as follows:
$100,000 x 1.7% x 3 = $5,100
Calculating the High Three for FERS Employees
For FERS employees, the High Three calculation is slightly different. Follow these steps:
1. Identify your highest three consecutive years of service.
2. Determine your highest salary during those three years.
3. Multiply your highest salary by 1.1 percent for each year of service.
4. Add the results together to get your High Three annuity amount.
Using the same example as above, your High Three annuity for FERS would be calculated as follows:
$100,000 x 1.1% x 3 = $3,300
Considerations for High Three Calculation
It’s important to note that the High Three calculation is just one part of your overall federal retirement benefits. Other factors, such as your age at retirement, cost-of-living adjustments, and survivor benefits, will also impact your retirement income.
Additionally, if you have less than 20 years of creditable service, you may be eligible for a different annuity calculation, such as the High Five or the Minimum Guarantee.
Conclusion
Calculating your High Three for federal retirement is an essential step in understanding your financial future. By following the steps outlined in this article, you can better prepare for your retirement and ensure that you receive the benefits you deserve. Remember to consult with a financial advisor or the Office of Personnel Management (OPM) for personalized guidance and assistance.
