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Civil Service Retirement System

The Civil Service Retirement System (CSRS) offers Federal Employees one of the best retirement packages around today.

As a CSRS, there are several factors you must take into consideration before retiring.

Are you sure you know about ALL of your Civil Service Retirement benefits?

While your pension makes up the biggest part of your government retirement benefits, the Civil Service Retirement System has three main components:

Basic Civil Service Pension
CSRS Voluntary Contribution Plan
Thrift Savings Plan (TSP)

Let’s take a look at some important things you should know about each part of your CSRS retirement...

Basic Civil Service Pension

Your Civil Service Retirement System pension will probably make up the biggest part of your retirement income.

Each pay period, the government will take out 7% of your pay to put towards your annuity (more if you are Special Provisions). But your pension is not based on these contributions.

Your Civil Service Retirement System Pension is a defined benefit program. It doesn't matter how much money you contributed. The amount you receive from your CSRS pension in retirement will depend on how long you've worked for the Federal Government and the salary you earned.

Once you retire, you can receive a basic CSRS pension every month for the rest of your life.

CSRS Pension vs. CSRS Annuity?

You've probably heard some people call your CSRS Pension a CSRS annuity. OPM even refers to your pension as an annuity.

But, technically, it's not an annuity. I bring up the difference because when I talk with CSRS employees about annuities, they get confused.

An annuity is something you purchase from an insurance company to pay you a specific amount of money for a period of time. A pension is something that you receive from your employer when you retire.

So, when people talk about a CSRS Annuity or a CSRS Pension - they're really talking about the same thing.

When Can I Retire with CSRS?

To retire under the Civil Service Retirement System, you need to meet a combination of years in service and age requirements. And in most cases, you must also have been a CSRS for one of the last two years before your retirement.

There are basically six different ways you can retire under the CSRS program:

Optional CSRS Retirement - If you qualify - your retirement can be effective 30 days after you retire. Am I eligible for Optional CSRS Retirement?

Special Provisions CSRS Retirement - Did you serve in Special Provisions? Law Enforcement Officers, Air Traffic Controllers, Fire Fighters and other Special Provisions employees have different retirement rules. Tell me more about Special Provisions CSRS Retirement.

Early Out CSRS Retirement - When your agency is undergoing a reorganization, you may be offered an Early Out. What do I need to know about an Early Out?

Discontinued Service CSRS Retirement - If you agency is undergoing a Reduction in Force (RIF) or your position is relocated - you may be qualify for Involuntary Separation or Discontinued Service Retirement.

Deferred CSRS Retirement - If you leave the government before you are eligible to retire, you may be able to claim your pension later with a CSRS Deferred Retirement.

Disability CSRS Retirement - If you become disabled at your government job, you may qualify for a disability retirement. What should I know about CSRS Disability Retirement?

You may have heard of Early Retirement under the FERS program. With Early FERS Retirement, FERS employees can retire with 10 years of service at your Minimum Retirement Age (MRA). Unfortunately, CSRS does not have an early retirement option like FERS.

However - if you're ready to leave Federal Service, but don't qualify for retirement - you may qualify for Deferred Retirement in the Civil Service Retirement System.

Calculating Your CSRS Pension

With the Civil Service Retirement System - once you are eligible to retire - you can receive a pension for the rest of your life.

How much money will you get? Let's walk through how to calculate your CSRS retirement pension.

In order to calculate your basic CSRS pension, you will need to know three things…

Your High 3 Salary
Your Years of Creditable Service
Your Pension Multiplier

Let’s look closer at each part of the equation:

#1) Your High 3 Salary

Your High Three Salary is an average of the your salary for the 3 highest paying consecutive years of your service.

Your basic pay is the basic salary you earn for your position. It includes shift rates and locality pay; but does not include COLA, overtime or bonuses.

Click here to find out more about calculating your High 3 Salary

#2) Years of Creditable Service

The next step involves calculating your Years of Creditable Service.

When do you start counting?

Most people would say your Service Computation Date (SCD). But you need to know that your SCD is used to calculate your annual leave – not for your pension.

OPM actually uses your Retirement Service Computation Date (RSCD) as the beginning of your Years in Service for pension calculation.

If you request a Personal Statement of Benefits, you will see your *Estimated* RSCD. But remember, this is just an estimate.

So when is your RSCD made official? After you retire. Really.

Approximately 6 months *after* you retire, OPM will review your file and calculate your RSCD.

So where do we start? For many people, their Service Computation Date (SCD) will be the same as their RSCD – so we’ll start with your SCD. You can find your SCD on one of your SF50s.

Count the number of whole years, months and days of creditable service from your SCD to your planned retirement date.

Then you need to convert those years, months and days into years using the Time Factor Table.

Getting Help with Your RSCD

You will want to get help calculating your RSCD if you...

Had temporary time (many Feds start with temp time)
Took leave without pay
Had a break in service
Are planning on retiring with just enough time to qualify for CSRS retirement

Federal Employees have been called back to work 6 months after they retired (or thought they retired) because when OPM calculated their RSCD – they didn’t have enough years in service to be eligible for retirement. Don’t let this happen to you!

#3) Your Pension Multiplier

The Civil Service Retirement System has a three levels of Pension Multipliers based on how many years you have in service.

1.5% for the first 5 years
1.75% for the next 5 years
2.0% for any years after that

There are some special situations where the pension multiplier is higher.

If you served as a Fire Fighter, Law Enforcement Officer, Air Traffic Controller or a Nuclear Materials Courier, click here to learn more about CSRS Special Provisions Retirement.

CSRS Pension Formula

Basically - your Civil Service Retirement System pension is calculated by taking...

Your High-3 Salary x First 5 Years of Service x 1.50% .... plus
Your High-3 Salary x Next 5 Years of Service x 1.75% .... plus
Your High-3 Salary x More than 10 Years in Service x 2.00%

= Your Annual CSRS Pension

Example of CSRS Pension Calculation

Let's say you had a High-3 Salary of $55,000 and 25 years of creditable service. Your CSRS pension formula would be...

$55,000 x 5 years x 1.5% = $4,125.00
$55,000 x 5 years x 1.75% = $4,812.50
$55,000 x 15 years x 2.0% = $16,500.00

$4,125.00 + $4,812.50 + $16,500.00 = $25,437.50 per year
$25,437.50 / 12 = $2,120 per month

There is a rule in the Civil Service Retirement System that you can only receive 80% of your High-3 Salary in your pension. This is typically only a concern when you have more than 41 years in service.

Maxing Out Your CSRS Pension

Under the Civil Service Retirement System (CSRS) - you max out your pension at 80% of your High-3 Salary. Most CSRS reach that 80% after 41 years and 11 months in service.

What happens after you reach 41 years and 11 months of service? Is 80% really the highest your CSRS pension can go?

Find out more about Maxing Out Your Civil Service Retirement System Pension.

Reductions to Your CSRS Pension

Your Civil Service Retirement System Pension could be reduced for...

Survivor Benefits - Your CSRS Pension could be reduced if you choose survivor benefits. Will my survivor still get my CSRS pension after I die?
Early Out Retirement Before Age 55 - Your CSRS Pension would be reduced by one-sixth of a percent for each full *month* you are under age 55. Click here to see an example of this reduction and learn more about Early Out CSRS Retirement.

CSRS Voluntary Contribution Plan

You might say that the CSRS Voluntary Contributions program is the best kept secret in CSRS.

The Voluntary Contribution program is a part of the Civil Service Retirement System that allows you to save after-tax dollars for retirement.

It was designed to allow CSRS to save extra money to purchase an annuity at retirement - but you don't have to buy the annuity with the VCP program. You can use the VCP to do some pretty neat things.

So what's the big secret? Find out more about the CSRS Voluntary Contributions program.

CSRS & Thrift Savings Plan

The Thrift Savings Plan (TSP) is a special retirement account for Federal Employees.

The TSP allows you to save pre-tax dollars in a special personal retirement account. You get to choose how to invest those dollars - but your choices are limited.

While you will receive a fixed amount from your CSRS pension - the money you get from your TSP in retirement will depend on how much money you put in and how well you managed it.

Federal agencies will match a portion of TSP contribution for FERS - but not for CSRS. Even so - CSRS should consider participating in the TSP. Even without the match, the TSP is a great investment option that allows you to save and invest pre-tax dollars for retirement.

Most Federal Employees are concerned that they will outlive their money. With the rate of inflation today, your CSRS pension will not be able to keep up with the rising costs of daily life.

The TSP is designed to help you save extra money for your future.

When you retire, you have several choices in what to do with your TSP - including transferring your money to an IRA. Learn about what you can do with your TSP when you retire.

Want to start with TSP basics? Here's some good basic into about the Thrift Savings Plan.

CSRS and Social Security

Most employees in the Civil Service Retirement System do not pay into Social Security. The exception is CSRS Offset. CSRS Offset employees do pay into Social Security.

Although CSRS do not pay into Social Security – you may still be eligible to receive Social Security if you had another civilian job or if your spouse is eligible. Can CSRS get Social Security?

Your CSRS Benefits

The Civil Service Retirement System offers you many choices in retirement. I hope you've learned more about your Civil Service benefits here today.

As a CSRS - you have one of the best retirement benefit programs out there. But - you also need to make sure that you understand all of your benefits under the Civil Service Retirement System.

I want to encourage you to learn as much as you can about your CSRS retirement. You need to know that *you* are responsible for your retirement. And you want to make sure that you get all the CSRS retirement benefits you have earned.

Learn More about Your CSRS Retirement

Want to learn more? We offer live in-person CSRS Retirement Classes in Anchorage, Alaska.

Not in Anchorage? We’re developing a special training course to help Federal Employees understand their benefits.

Click here to tell us *how* you want to learn about your retirement benefits.

"Who Can Help Me?"

Wondering how your CSRS benefits apply to your personal situation?

OPM and your HR department can give you information - but they simply aren't equipped to help you determine what benefit choices are the best for your personal situation.

Are you looking for someone to help you get the most out of your Federal benefits and help you manage your personal and retirement finances?

Consider finding a financial planner who is also experienced in Federal benefits.

Learn more about how a Federal Retirement Planner can help you.

Could Bad Advice Ruin Your Retirement?

Could you be making a mistake in your retirement planning - and not even know it?

What if you’ve forgotten to consider an important aspect of your federal retirement benefits? Could it really ruin your retirement?

When I talk to Federal Employees about their retirement, I’ve seen seven particular mistakes that seem to come up again and again.

In addition to teaching federal retirement classes, I’m also a Financial Planner for Federal Employees. I’ve helped many Federal Employees retire successfully – so I’ve seen the problems that come up, but I also know how to fix them.

While I can still help Federal Employees get out of these mistakes – I’d rather help you avoid these mistakes all together. I’ve created a special report just for you, because I want to help Federal Employees avoid costly retirement mistakes.

What are the most common retirement mistakes that federal employees make?

Register to get access to my FREE Special Report on The 7 Classic Retirement Mistakes Federal Employees Mistake… and How to Avoid Them. I will also send you my monthly Newsletter (e-zine) Federal Retirement Planning.

I am providing this Special Report totally free to subscribers of Federal Retirement Planning. Just complete the form below, and click on the “Subscribe” button. You will then receive a confirmation email asking you to confirm your request.

Don’t let these 7 classic mistakes ruin your federal retirement. Register for my monthly Newsletter (e-zine) Federal Retirement Planning and get your copy of my FREE Special Report today.

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