How to Calculate Your FERS Retirement Annuity: Formula, High-3, and Sick Leave

The Basic FERS Formula

Every FERS annuity starts with the same calculation:

Basic Annuity = Accrual Rate × High-3 Average Salary × Years of Creditable Service

The accrual rate is either 1.0% or 1.1%, depending on your age and service at retirement. The high-3 is your highest average basic pay over any consecutive three-year period. And years of creditable service includes your civilian employment, qualifying military service (if the deposit is paid), and unused sick leave credit.

Each of these components has specific rules that determine the final number, and small variations compound over a 20–30 year retirement.

The 1.0% vs. 1.1% Accrual Rate

Most FERS employees retire under the 1.0% accrual rate. The higher 1.1% rate applies only when you meet both conditions:

1. You separate from federal service at age 62 or older
2. You have 20 or more years of creditable service

If you separate at age 60 with 25 years of service, you get 1.0%. If you separate at age 62 with 25 years, you get 1.1%. That 0.1% difference may sound trivial, but on a high-3 salary of $100,000 with 25 years of service, it's the difference between a $25,000 annual annuity and a $27,500 annual annuity — $2,500 more per year for the rest of your life.

This is one reason some employees with 20+ years of service consider working until age 62 rather than retiring at their MRA or at age 60: the 1.1% multiplier applies to every year of service, not just the years after age 62.

How the High-3 Works

Your "high-3 average salary" is the average of your highest basic pay over any period of three consecutive years. For most employees, this is the final three years of their career, since basic pay generally increases over time through step increases and promotions.

What counts: Basic pay, locality pay, and other pay elements that OPM treats as basic pay for retirement purposes. Verify any specialized pay element against your agency's official retirement estimate.

What doesn't count: Overtime, bonuses (including recruitment/retention/relocation incentives), lump-sum leave payouts, and premium pay for Law Enforcement Officers under FERS special provisions.

The three-year period doesn't have to align with calendar years. OPM looks at consecutive service — if your highest-paid 36-month stretch was from October 2023 to September 2026, that's your high-3 window.

A Common Mistake: Breaks in the High-3

If you had a break in service or a temporary reduction in pay within your last three years, it can affect which 36-month period produces the highest average. Use your official pay history to verify the window. Some employees time their retirement to ensure their highest-paying 36 months fall within the window.

Sick Leave Credit

Unused sick leave at the time of retirement is converted to creditable service for the annuity calculation. The conversion rate: 2,087 hours of sick leave equals one year of additional service. OPM converts the balance using its official sick-leave conversion chart, expressing the result in years, months, and days.

Sick leave credit increases your annuity but does not count toward meeting the service requirements for retirement eligibility. You can't use sick leave to reach the 5-, 20-, or 30-year thresholds — only to boost the annuity formula once you've already met the eligibility criteria.

For an employee with a high-3 of $90,000 and 1,000 hours of unused sick leave at the 1.0% accrual rate:

• 1,000 hours ÷ 2,087 = approximately 0.48 years (about 5.7 months) of additional service credit
• 0.48 × (1.0% × $90,000) = approximately $430 more per year

It's not a massive number in isolation, but over a 25-year retirement, that's more than $10,000 in additional benefits from hours you didn't use.

Working Through an Example

Take a GS-13, Step 10 employee in the Washington, DC locality area retiring at age 62 with 28 years of creditable service and 1,200 hours of sick leave:

1. High-3 salary: Assume $132,000 (average of the last three years including locality)
2. Accrual rate: 1.1% (age 62+ with 20+ years)
3. Base service: 28 years
4. Sick leave credit: 1,200 ÷ 2,087 = 6.9 months ≈ 0.575 years
5. Total creditable service: 28.575 years
6. Annual annuity: 1.1% × $132,000 × 28.575 = $41,491/year ($3,458/month)

After the 10% survivor annuity reduction (if the employee elects the full survivor benefit), the monthly payment drops to approximately $3,112.

This annuity is one leg of the FERS "three-legged stool" — the other two being Social Security and Thrift Savings Plan withdrawals. And since the Social Security Fairness Act repealed the WEP and GPO in January 2025, federal retirees now receive their full Social Security benefit without any offset for their government pension.

Verify Your Numbers Before You File

The FERS Retirement Application Guide walks through the annuity calculation step by step using your actual service records, so you can cross-check the estimate your agency provides during pre-retirement counseling against your own independent calculation.

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