How to Calculate a CSRS Annuity
A CSRS annuity refers to a retirement plan that is offered to individuals under the Civil Service Retirement System. In general, the payments you will receive are tied directly to your years of creditable service and your highest three-year average salary. Once the basic payment arrangement has been calculated, however, these payments can be reduced if you receive a refund of contributions or if you are retiring before age 55. Payments can also be reduced after your death when your [former] spouse continues to receive payments.
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Instructions
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1
Gather all of your retirement information, including your salary history. You need to know this to make your initial annuity calculation. Payment calculations are typically done in three steps and reflect payments that will be made over time.
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2
Determine your three highest-paying years of service and calculate the average income for those three years. Typically, your highest three years of service pay will be the last three years of service you worked. However, this is not always the case. The three highest years must be consecutive years. Also, the three highest-paying years of service include basic pay only. Basic pay does not include overtime, bonuses, military pay, or cash rewards.
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3
Multiply your highest three-year average by 1.5 percent and multiply that number by 5. For example, if your highest three-year average was $50,000, your calculation would look like this:
$50,000 x .015 x 5 = $3,750 -
4
Multiply your highest three year-average by 1.75 percent and then again by 5. Again, your calculation would look like this:
$50,000 x .0175 x 5 = $4,375 -
5
Multiply your highest 3-year average by 2 percent. This time, you must multiply this figure by every year you have worked over 10 years. So, if you worked a total of 20 years, your calculation would look like this:
$50,000 x .02 x 10 = $10,000
If you have 30 years of service, your calculation would look like this:
$50,000 x .02 x 20 = $20,000 -
6
Add your totals from Step 3 to Step 5. In our example, assuming 20 years of total service, the final total would be $18,125. For 30 years of total service, your final total would be $28,125. This number represents your annual retirement income. Naturally, the longer you work, the more income you will make in retirement.
Your retirement income, by law, cannot exceed 80 percent of your working income. In our example, this would mean that your retirement income would top out at $40,000 a year.
Also, you are eligible for a cost-of-living increase every year. This increase can range from .5 to 5.8 percent in the first year, depending on when your first annuity payments were made to you. Thereafter, you receive regular cost-of-living, or COLA, increases.
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