Federal Retirement Guide: 7 Essential Benefits You Should Not Overlook

If you expect to leave federal service within the next year, the seven benefits below can determine whether your first decade of retirement feels manageable or financially tight. Each one comes with deadlines, elections, or hidden pitfalls that are easy to miss.

The current environment also makes careful planning especially important. The 2027 FERS cost-of-living adjustment is 2.6%, which is one point below the 3.6% increase for Social Security and CSRS retirees. General Schedule base and locality pay remain frozen for January 2027, FEHB enrollee premiums are rising by an average of 10.9% for 2027, and Open Season begins November 9. OPM has also shifted fully to digital retirement filing, although processing times are still lengthy.

Use this piece as a working checklist. Review each benefit, then refer to the timeline near the end to add key dates to your calendar.

1. Your FERS basic annuity

The FERS basic annuity is a lifelong pension adjusted for inflation, and it forms the base of your retirement income. It is calculated at 1% of your High-3 average salary for each year of service. If you retire at 62 or later with at least 20 years of service, the factor increases to 1.1%.

Check these points before choosing a retirement date:

• Eligibility. Immediate retirement usually requires your Minimum Retirement Age (MRA) plus 30 years, age 60 with 20 years, or age 62 with 5 years. MRA plus 10 years is another option, but the annuity is reduced by 5% for each year you are under 62 unless you postpone it.
• High-3 and contributions. Your High-3 is the highest average basic pay over any three consecutive years. Standard FERS employee contribution rates remain 0.8%, 3.1%, or 4.4%, and the High-3 formula remains in place. Proposals in 2025 to alter contribution rates and switch to a High-5 calculation were not enacted.
• COLA rules. FERS retirees generally qualify for COLAs at age 62. When inflation is above 3%, FERS receives the CPI increase minus one percentage point. When inflation is between 2% and 3%, FERS gets 2%. Below 2%, FERS gets the full amount. For 2027, that means 2.6% for FERS and 3.6% for CSRS.
• Final estimate. Request a retirement estimate from your agency HR office and make sure every period of service is creditable before you commit.

2. The Thrift Savings Plan (TSP)

The TSP is the retirement benefit you control most directly, and contributing at least 5% of basic pay allows you to receive the full agency contribution. That includes a 1% automatic contribution plus up to a 4% match.

The 2026 contribution limits are:

Points to watch:

• Mandatory Roth catch-up. Starting in 2026, if your prior-year wages from TSP-eligible positions were above $150,000, catch-up contributions must be Roth.
• Traditional vs. Roth. Compare your current tax bracket with the one you expect in retirement. Many retirees keep both for flexibility.
• Withdrawals. You can generally withdraw without penalty if you separate from service in or after the year you turn 55. Required minimum distributions begin at 73 or 75, depending on your birth year.
• Stay in the TSP. Its low expense ratios are one reason many retirees leave money in the plan instead of rolling it over.

3. Social Security

FERS employees pay into Social Security, and the age at which you claim is one of the biggest financial choices you will make. Claiming at 62 permanently lowers your benefit, while delaying until age 70 increases it. For anyone born in 1960 or later, full retirement age is 67.

• Request your earnings record. Review your statement at ssa.gov for gaps or errors well before you file.
• Mind the earnings test. If you claim before full retirement age and continue working, benefits are withheld above an annual limit. The 2027 limit is $25,560.
• Coordinate with your pension. A larger TSP balance or pension may allow you to delay claiming, increasing a lifetime benefit that also rises with inflation.
• Plan for the survivor. The higher earner’s benefit becomes the survivor benefit, which is another reason delay can make sense.

4. The FERS Annuity Supplement

The FERS Annuity Supplement is a temporary bridge payment that approximates your Social Security benefit until age 62. It is paid only if you retire on an immediate, unreduced annuity, such as MRA plus 30 years or age 60 with 20 years, before age 62. It is not available with MRA plus 10 or deferred retirement.

• Calculation. It is based on your estimated Social Security benefit at 62, prorated by your FERS service divided by 40 years.
• Earnings test. Like Social Security, it can be reduced if you work after retiring and earn above the annual limit.
• It ends at 62. The payment stops at 62 whether or not you have claimed Social Security.
• Verify before you rely on it. Congress debated eliminating the supplement in 2025. Confirm its current status with your agency benefits office or OPM before finalizing your retirement date.

5. FEHB health coverage in retirement

Keeping Federal Employees Health Benefits coverage in retirement is one of the most valuable advantages of federal service, but you must qualify. In general, you need to be covered by FEHB for the five years immediately before retirement, or since your first chance to enroll if that period is shorter. Missing this rule can mean losing FEHB for life, so check your enrollment history now.

What is changing for 2027:

• Open Season runs November 9 through December 14, 2026. Changes take effect in January 2027.
• Premiums are increasing. OPM says the average enrollee share rises 10.9% for 2027, down from 12.3% in 2026. Individual plans vary widely, so compare yours carefully.
• Nine FEHB plan options are leaving. If your plan is among them, you must choose a new one during Open Season or you will be placed into a default plan.
• Dependent documentation. Anyone adding a new family member during Open Season must now provide supporting documents for verification.

Medicare planning:

• You do not have to enroll in Medicare Part B to keep FEHB, but many retirees add it at 65 to reduce out-of-pocket costs. Compare your plan’s Medicare coordination features.
• The 2027 Part B premium and income-related adjustments had not been officially announced at the time of writing.
• FEDVIP dental and vision coverage is separate and follows its own enrollment, usually during the same Open Season window. FEGLI and long-term care insurance do not participate in Open Season.

6. Survivor benefits and FEGLI

Your survivor annuity election is made at retirement and is very difficult to change later, so review it with your spouse before filing. A married retiree needs the spouse’s written consent to waive or reduce a survivor benefit.

A surviving spouse who is covered under your FEHB plan can generally keep that coverage if a survivor annuity is paid, which adds value to the election.

FEGLI life insurance:

• To keep FEGLI in retirement, you generally must have been covered for the five years before retirement, or since your first opportunity.
• Basic insurance can reduce after 65 under a 75%, 50%, or no-reduction option. The less it decreases, the higher the retirement premium.
• Option B and Option C premiums rise with age, so review whether you still need them. Consider your life insurance needs alongside your pension, TSP, and survivor election.

7. Unused sick leave and creditable service

Unused sick leave and every creditable year of service can raise your annuity, yet they are often the benefits people check last. Under FERS, unused sick leave is converted into additional service time when the annuity is computed, using 174 hours per month. It increases the amount of the annuity, but it does not count toward eligibility.

• Protect your sick leave balance. Check it during your final year and avoid using hours you do not need.
• Audit your service history. Make sure every period of federal service appears in your personnel records, including temporary and part-time work.
• Military service. Active-duty service may be creditable if you make the required deposit. Ask your HR office what is owed and how it affects your computation.
• Civilian deposits and refunds. If you ever received a refund of retirement contributions, ask about redeposit options and their effect on your annuity.
• Annual leave. Unused annual leave is paid out as a lump sum when you separate. Plan for the tax and cash-flow effect of that payment.

Your retirement timeline checklist

Expect roughly three to six months between your last day and your final annuity amount, with interim pay in the meantime. OPM ended paper retirement processing for more than 95% of applications on July 1, 2026. In August 2026, immediate retirement cases averaged 79 days at OPM, and July digital claims averaged about 98 days. Agencies generally need at least 60 days to prepare your package before sending it to OPM.

12 months or more before retirement

• Confirm your retirement eligibility date and annuity type (immediate, MRA+10, deferred)
• Verify five years of continuous FEHB and FEGLI coverage
• Audit your service history, sick leave balance, and any deposits owed
• Raise TSP contributions to at least 5% and use catch-up limits if eligible
• Request your Social Security earnings record

6 months before

• Request a retirement estimate from your agency HR or benefits office
• Discuss the survivor annuity election with your spouse
• Choose a retirement date; many retirees pick the end of a pay period or the end of the month to maximize leave and annuity timing
• Compare FEHB plans during each Open Season window

90 days before

• Gather marriage and birth records and any documents your HR office requests for your application and FEGLI continuation
• Submit your retirement application through your agency; OPM now accepts applications through its Online Retirement Application
• Budget for interim payments, which OPM guidance places at roughly 60% to 80% of your final net annuity

After you retire

• Set up your OPM online account and review your first annuity statement
• Make your TSP withdrawal elections
• Choose your Social Security claiming age and apply when ready
• Review your Medicare Part B decision around age 65
• Check your tax withholding on annuity and TSP withdrawals

Bottom line

The federal benefits package works best for employees who verify eligibility early, maximize the TSP, make deliberate survivor and health coverage decisions, and file with enough time to spare. Start with your five-year FEHB and FEGLI history and a retirement estimate, because those two items leave the least room for correction later.

This article provides general information, not individualized financial or legal advice. Retirement rules and figures change, so confirm your details with your agency HR office, OPM, or a qualified federal retirement planner before acting.