Is The FERS Annuity a Good Idea?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding FERS Annuity

Federal Employees Retirement System (FERS) annuity offers a government-backed retirement plan for federal workers. While it provides stable retirement income, comparing it with a Fixed Indexed Annuity (FIA) with a Guaranteed Lifetime Withdrawal Benefit (GLWB) reveals significant differences. Let’s explore these options and see why a GLWB might be a better choice.

How It Works

  • Eligibility: Requires specific years of federal service.
  • Calculation: Based on your highest three years of salary (high-3) and years of service.
  • Supplement: Provides an additional payment until Social Security benefits start at age 62 if you retire early.


  • Stable Income: Offers predictable monthly payments.
  • Government-Backed: Ensures reliability and security.

Cons of FERS Annuity

  • Limited Access: Funds are generally inaccessible until retirement.
  • No Market Participation: Returns are fixed and not linked to market performance.
  • Early Retirement Restrictions: Limited options for accessing funds before retirement age.
  • Potential High Costs: Contributions and administrative costs can be high.
What Is A Federal Annuity

Comparing with Fixed Indexed Annuity with GLWB

How It Works

  • Market Participation: Tied to a stock market index, allowing for growth potential while protecting against losses.
  • Guaranteed Income: GLWB ensures a lifetime income stream regardless of market conditions.

Benefits of FIA with GLWB

  • Growth Potential: Participates in market gains while protecting against losses.
  • Flexibility: Access to funds with fewer restrictions compared to FERS.
  • Guaranteed Lifetime Income: Provides income for life, often with higher payouts.
  • Tax-Deferred Growth: Earnings grow tax-deferred until withdrawal.

Why GLWB Is Superior to FERS Annuity

  • Higher Potential Returns: Market participation can lead to higher growth compared to the fixed returns of FERS.
  • Greater Flexibility: More accessible funds and fewer restrictions on early withdrawals.
  • Enhanced Lifetime Income: Guaranteed lifetime income can often be higher and more reliable.
  • Tax Advantages: Tax-deferred growth offers additional financial benefits.
What Are Federal Annuities

How We Can Help

At The Annuity Expert, we understand that planning for retirement can be overwhelming. You want to ensure you have enough income to last a lifetime, but the options can be confusing. You may be worried about making the wrong choice and losing out on potential growth or flexibility.

We’ve been helping individuals like you for 15 years as an insurance agency, annuity broker, and retirement planner. We believe in finding the best solutions at the lowest costs, ensuring that your retirement plan is both effective and affordable.

What We Recommend

To achieve your desired retirement outcomes, follow these high-level steps:

  1. Initial Consultation: Contact us for a free advice session where we’ll discuss your current retirement plan and financial goals. The main benefit is gaining clarity on your options and understanding how different annuities can work for you.
  2. Customized Plan Development: We’ll create a personalized retirement plan that includes a Fixed Indexed Annuity with a Guaranteed Lifetime Withdrawal Benefit. During this step, you’ll see how this option can provide higher growth potential and more flexibility compared to the FERS annuity.
  3. Implementation and Support: We’ll help you implement your new retirement plan and provide ongoing support. The main benefit is the peace of mind that comes from knowing you have a secure and flexible retirement income strategy.

Features and Benefits

  • Personalized Retirement Planning: Tailored strategies that meet your specific needs.
  • Guaranteed Lifetime Income: Ensures you’ll never run out of money in retirement.
  • Market Participation: Potential for higher returns through market-linked growth.
  • Flexibility: Easier access to funds when you need them.

Common Objections and Strong Arguments

  • Concern: “I’m worried about the costs.”
    Argument: Our solutions are designed to provide the best value at the lowest cost, ensuring you get the most out of your investment.
  • Concern: “What if the market performs poorly?”
    Argument: With a Fixed Indexed Annuity, your principal is protected from market losses, ensuring you don’t lose your initial investment.

Contact us for free advice or a quote, and start planning a better retirement today.

Is The Fers Annuity A Good Idea

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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