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5 Things You Should Expect If You’re Planning to Retire Under CSRS in the Next Few Years

Jeff Boettcher
July 27, 2025

Key Takeaways

CSRS retirees enjoy a generous pension, but you need to plan for changes in healthcare costs and Social Security offsets.
With limited time left to retire under CSRS, understanding your options for survivor benefits, taxes, and cost-of-living adjustments is crucial.

Your Pension Will Be Substantial, but You Must Plan for Other Retirement Costs

If you’re preparing to retire under the Civil Service Retirement System (CSRS) in the next few years, you’re part of a dwindling group of federal employees covered by this generous pension system. While CSRS offers one of the most robust annuities in the public sector, you’ll still need to account for additional costs like healthcare, taxes, and Social Security reductions.

CSRS pensions are calculated based on your high-3 average salary

and years of service, often providing around 50-80% of your final salary in retirement income. However, CSRS does not include automatic Social Security benefits, so you may need to adjust your financial plans accordingly. If you’ve worked a second job that paid into Social Security, keep in mind that the Windfall Elimination Provision (WEP) could reduce your benefits.

Additionally, consider that healthcare costs under the Federal Employees Health Benefits (FEHB) Program will persist into retirement. If you do not have Medicare, premiums can be substantial. Planning for these expenses ensures that your pension covers all necessary living costs.

Social Security and the Windfall Elimination Provision (WEP) May Reduce Your Benefits

Many CSRS retirees are caught off guard by the WEP, which can significantly reduce any Social Security benefits you may have earned from other employment. Since CSRS itself doesn’t contribute to Social Security, your government earnings don’t count toward Social Security credits.

If you have fewer than 30 years of substantial earnings under Social Security, WEP can reduce your monthly Social Security check by up to 50% of your pension amount.
The maximum WEP reduction in 2025 is $557 per month, depending on your earnings history.

The Government Pension Offset (GPO) is another factor to watch out for. If you are eligible for spousal or survivor benefits through Social Security, GPO can reduce or even eliminate them. This means that if your spouse worked under Social Security, you may not receive the full benefit you were expecting.

Given these limitations, it’s crucial to review your projected Social Security benefits and adjust your retirement planning accordingly. You may need additional savings or a strategy to maximize your CSRS pension to compensate for these reductions.

Cost-of-Living Adjustments (COLAs) Are Guaranteed—But May Not Keep Up With Inflation

One of the major advantages of CSRS is the guaranteed Cost-of-Living Adjustment (COLA) applied annually to your pension. Unlike Federal Employees Retirement System (FERS) retirees, who receive a reduced COLA under certain conditions, CSRS retirees get full COLAs based on the official Consumer Price Index (CPI-W).

In years when inflation is high, CSRS retirees receive a full inflation adjustment to help maintain their purchasing power.
However, COLAs are based on CPI-W, which may not always reflect actual increases in retirees’ expenses, such as healthcare and housing costs.

For example, in 2025, the COLA increase for CSRS retirees is expected to be around 3.2%, which can make a difference in covering rising expenses. However, higher inflation could erode purchasing power over time, especially for those with long retirements.

To prepare, consider how other income sources, investments, or savings might supplement your CSRS pension to offset inflation-related costs in the long term.

Survivor Benefits Are Optional, But You Must Plan for Your Spouse’s Future

If you’re married, you have the option to elect a survivor annuity for your spouse, but doing so reduces your pension while providing your spouse with a percentage of your annuity after you pass away.

A full survivor benefit (providing your spouse with 55% of your pension) requires a reduction in your annuity, typically around 10% of your monthly payment.
A partial survivor benefit is available with a lower reduction, but it may not provide enough income for your spouse in the long run.

If you decline survivor benefits, your spouse cannot remain on FEHB health coverage under your plan. This can be a significant drawback if your spouse relies on your federal health insurance.

Before making a decision, carefully weigh the financial trade-offs and consider whether life insurance or other assets could provide adequate security for your spouse.

You Have a Limited Window to Retire Under CSRS Before Mandatory Age Limits Apply

Since CSRS closed to new federal employees in 1984, the remaining workforce covered under this system is rapidly shrinking. If you’re still working under CSRS, you’re likely nearing the mandatory retirement age, depending on your role:

Age 55 with 30 years of service (standard retirement eligibility).
Age 60 with at least 20 years of service (early retirement option).
Age 62 with at least 5 years of service (minimum eligibility).

Certain federal jobs, such as law enforcement or air traffic control, have earlier mandatory retirement ages, so check your agency’s policies. If you’re approaching age 62, you should review your retirement options soon, as waiting too long could limit your pension benefits.

For those who want to continue working past the retirement threshold, consider phased retirement options, which allow you to work part-time while receiving partial pension benefits.

Make the Most of Your CSRS Retirement Benefits

Retiring under CSRS is a unique opportunity in the federal workforce, but it requires careful planning. While you’ll receive one of the best pensions available, factors like Social Security reductions, healthcare costs, survivor benefits, and inflation can all impact your financial stability.

By preparing ahead of time and exploring all your options, you can maximize your retirement security and enjoy the benefits of a lifetime of federal service. If you have questions about pension calculations, survivor benefits, or health coverage, reach out to a licensed agent listed on this website for expert guidance tailored to your situation.

Jeff Boettcher

For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. "each time I work with my clients, I'm building their future, and there are few things that are more important to a family than a stable financial foundation."

Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, "Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income." Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.

A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an 'aging' athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.

Disclosure: Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.