What is a Federal Annuitant?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What is a Federal Annuitant?

A federal annuitant is an individual who receives a pension or annuity from the federal government after retiring from federal service. This category includes retired military personnel, civil servants, and postal workers. The annuity is a regular payment made to the retiree, providing financial support during their retirement years.

Key Elements of Federal Annuities

Length of Service

The amount of the annuity is primarily determined by the length of service. Typically, the longer you have served, the higher your annuity payment will be.

Highest Three Years of Salary

Federal annuities are calculated based on the average of your highest three consecutive years of salary. This is commonly referred to as the “high-3” average salary. It ensures that your annuity reflects your peak earning years, which can significantly impact the total amount you receive.

Age at Retirement

The age at which you retire also plays a crucial role. Retiring at the minimum retirement age with sufficient years of service qualifies you for a full annuity. However, retiring earlier may result in a reduced annuity.

Retirement Plans: FERS and CSRS

Federal employees are typically covered under one of two main retirement systems:

  • Federal Employees Retirement System (FERS): Introduced in 1987, FERS covers employees hired after that year. It includes three components: a basic benefit plan, Social Security, and the Thrift Savings Plan (TSP).
  • Civil Service Retirement System (CSRS): Established in 1920, CSRS is for employees hired before 1987. It is a defined benefit plan providing a higher annuity but does not include Social Security.

Benefits for Federal Annuitants

Regular Income

As a federal annuitant, you receive a steady stream of income, which helps maintain financial stability during retirement.

Health Insurance

Federal annuitants continue to have access to the Federal Employees Health Benefits (FEHB) program, ensuring comprehensive health coverage.

Survivor Benefits

Federal annuities often include survivor benefits, allowing you to provide for your spouse or other dependents after your death. It’s essential to make elections for these benefits at the time of retirement to ensure coverage.

Additional Considerations

Cost-of-Living Adjustments (COLAs)

Federal annuities are subject to cost-of-living adjustments, which help protect your purchasing power against inflation. COLAs are typically applied annually based on changes in the Consumer Price Index (CPI).


Federal annuities are subject to federal income tax. Some states also tax these annuities, while others offer tax exemptions. Understanding the tax implications can help you plan better for your retirement finances.

Thrift Savings Plan (TSP)

For those under FERS, the TSP is a significant component of retirement planning. It is a defined contribution plan, similar to a 401(k), where you and your agency contribute to your retirement savings.

What Is Federal Annuitant

What We Recommend

To maximize your federal annuity benefits, consider the following:

  • Plan your retirement date carefully to optimize your annuity amount.
  • Understand your eligibility under FERS or CSRS and the specific benefits each system provides.
  • Review and adjust your health insurance and survivor benefit options to fit your needs.
  • Stay informed about COLAs and their impact on your annuity.
  • Consult with a retirement planner or use online tools to estimate your annuity and plan for potential tax liabilities.

For personalized advice and more information on federal annuities, feel free to contact us for free advice or a quote.

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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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