FERS employees have some good retirement benefits but apart from that, they have some hidden negative features that only become visible when the retirement process has got initiated and they start making use of the funds. According to FERS, as soon as you have reached your minimum retirement age, you can go ahead and retire immediately after settling for an annuity that is not reduced after serving 30 years of course. Let’s look at some of the pitfalls to FERS that not many people are aware of:
Downsides to FERS
- The annuity that you are you going to be getting will be based on the formula “0.01 multiplied by your years of service multiplied by your high-3 x”. The initial figure gets changed to 0.011 if you have served the organization for a minimum of 20 years and are not retiring before the age of 60.
- Also Read: 3 Reasons Certain Federal Employees Can Retire Years Earlier Than Their Peers Without Penalties
- Also Read: CSRS Retirement in 2024: Are You Making the Most of What This Classic Plan Has to Offer?
- Also Read: Roth IRA Basics for Beginners: What’s There to Learn?
- As a retired official of FERS you are bound to be presented with a substantial retirement supplement that is going to give you an estimate on the amount of social security benefits that you have piled up under the program. There are a few people that are excluded from the list and they include fire fighters, air traffic monitors and the law enforcement officers, this supplement is only paid after you have reached your MRA. It’s also worth noting that you are not going to get the SRS if you have left the government and then applied for an annuity later. Disability retired officers won’t get it either.
- You are not going to receive any annual COLAs either unless you are a retired officer with a disability or are an annuitant survivor.
There are other downsides worth mentioning too but these are the ones that are the most important in this regard.
