Retirement Benefits
The majority of federal workers are covered by the Federal Employees Retirement System (FERS). This system includes three components.
Social Security
Social Security costs are included in federal taxes and include:
- Monthly benefits for you after you turn 62 or if you become disabled, and benefits for your spouse and dependants if eligible
- Monthly benefits for your eligible survivors
- A lump sum payable upon your death
Basic Benefit Plan
Your agency contributes an amount equal to 1% of your salary to a retirement fund. The basic plan also includes benefits in case of disability, and benefits for your spouse and children in case of your death. To receive benefits under this plan, you must have at least five years of federal civilian service before you retire.
Thrift Savings Plan
Similar to a 401(k) plan, the Thrift Savings Plan (TSP) allows you to set aside part of your salary for retirement. Your agency contributes an amount equal to 1% of your salary per month, whether or not you contribute that month. In addition, when you make contributions, your agency contributes $1.00 for every dollar you contribute up to 2% of your salary, and 50 cents for every dollar you contribute from 2%–5% of your salary.
An article from Federal News Radio noted recently:
Some of the nation's top financial experts and publications, from Jane Bryant Quinn to CNBC's Jim Cramer to the legendary John C. Bogle, believe the TSP may be the best 401 (k) plan in the nation. For example: In 2002, Quinn's Personal Finance column said that "two models exist for a 'perfect' 401k plan. One is the TSP, run for federal workers." Her other favorite: TIAA-CREF the teachers retirement fund.