Federal Retirement Glossary

A permanently higher pension rate — 1.1% instead of the standard 1.0% per year of service — available only if you retire at age 62 or later with 20+ years of service.

A one-time lump-sum payment for your unused annual leave balance at separation, calculated at your final hourly rate of basic pay.

The age at which a more expensive option (like a higher survivor election or a delayed retirement) starts to pay off more, in cumulative dollars, than the cheaper alternative.

An annual inflation adjustment to your pension. FERS COLAs are reduced ('diet COLA') relative to actual inflation and don't apply before age 62 for most retirees.

Leaving federal service before retirement eligibility with 5+ years of service and collecting a reduced pension starting at age 62, with no FEHB or FEGLI continuation.

The federal government's group life insurance program, with premiums that escalate significantly by five-year age bands once you're in retirement.

Your federal health insurance program, which you can continue into retirement — at your own premium cost plus a government employer share — if you meet the 5-year continuous enrollment rule.

Your core lifetime monthly retirement payment, calculated as High-3 × years of service × a 1.0% (or 1.1%) multiplier.

A bridge payment that approximates the Social Security benefit you've earned through federal service, paid from certain early retirements until age 62 when it stops permanently.

The average of your highest 36 consecutive months of basic pay — the salary figure OPM uses as the base for your FERS pension formula. Usually your final three years, but not always.

A geographic pay adjustment added to your base GS salary to reflect regional labor-market costs — can add 15-45%+ depending on your duty station.

Paying a deposit (roughly 3% of your military basic pay, plus accrued interest) to count active-duty military time toward your FERS pension calculation.

The earliest age you can retire with an unreduced or reduced annuity based on your years of service, ranging from 55 to 57 depending on your birth year.

A postponed or immediate retirement option available at your MRA with only 10-29 years of service — the annuity is permanently reduced 5% for every year you're under age 62, unless postponed.

A lifetime pension's future payments expressed as a single lump-sum number in today's dollars, using a discount rate — useful for comparing a pension against other one-time compensation.

The IRS test that determines how much of your Social Security benefit is taxable — up to 85% — based on your other income plus half your SS benefit compared against fixed thresholds.

The IRS-mandated minimum amount you must withdraw annually from your Traditional TSP starting at a set age, to ensure the deferred tax eventually gets paid.

The choice between paying tax on TSP contributions now (Roth, tax-free withdrawals later) or deferring tax until withdrawal (Traditional) — the right choice depends on your current vs. expected retirement tax bracket.

A payment available to employees separated involuntarily (e.g., a RIF) who are not eligible for an immediate retirement annuity — one week of pay per year of service for the first 10 years, 1.5 weeks per year after.

Law enforcement officers, firefighters, air traffic controllers, and certain other positions that earn a higher 1.7% pension multiplier for their first 20 covered years and face mandatory retirement ages.

Whether and how much your state taxes your federal pension varies widely — nine states have no income tax at all, several fully exempt federal pensions, and the rest tax it as ordinary income.

Your choice at retirement of how much of your pension continues to your spouse after your death — full (50%), partial (25%), or none — traded off against a reduction to your own monthly annuity.

The income drop at age 62 when the FERS Supplement ends — often the single largest unplanned-for change in a federal retiree's monthly cash flow.

The federal government's 401(k)-equivalent defined-contribution retirement account, with an automatic 1% agency contribution plus matching up to 5% of salary.

Free money your agency adds to your TSP: an automatic 1% of salary regardless of your own contribution, plus a dollar-for-dollar match on your first 3% and 50 cents on the next 2% — 5% total at full participation.

An agency-offered early-out option letting eligible employees retire before their standard eligibility date, typically during a reorganization or reduction in force.

A lump-sum cash incentive (up to $25,000 before taxes) offered alongside VERA to encourage voluntary separation.

An automatic pay raise within your GS grade, earned after a waiting period (1, 2, or 3 years depending on your current step) contingent on acceptable performance.