Is the FERS Pension Worth It? A Calculator-Backed Analysis

Last Updated: February 25, 2026 Reading Time: 14 min

This week on r/govfire, a post titled "FERS pension doesn't seem so good" pulled 252 comments. The same debate plays out monthly: is the FERS pension actually a good deal, or are you leaving money on the table?

We ran the numbers for every scenario. A pre-2013 hire contributing 0.8% of salary over 30 years puts in roughly $24,000 total. The pension pays back $30,000 per year for life. That's a break-even of less than 9 months. Even post-2013 hires at 4.4% recover their entire contribution within 4-5 years of retirement.

Here's the full analysis, backed by the FERS Retirement Calculator.

Key Takeaways

• A $30,000/year FERS pension is equivalent to holding a $750,000 investment portfolio (using the 4% withdrawal rule)
• Pre-2013 hires (0.8% contribution) break even in under 1 year of retirement; post-2013 hires (4.4%) break even in 3-5 years
• The government contributes 17.3% of your salary to the pension fund on top of your contribution, but you never see it on your pay stub
• In 2025, Congress tried to cut FERS contributions, switch to high-5, and eliminate the supplement. All provisions were struck down. Your pension formula is unchanged.
• The pension's biggest weakness is the "diet COLA," which erodes purchasing power by roughly 22% over 25 years, but Social Security's full COLA partially offsets this

What You Pay In vs. What You Get Out

The break-even math depends on when you were hired, because contribution rates are wildly different.

Employee Contributions Over a 30-Year Career

Hire Date	Rate	30-Year Total (avg salary $85K)	30-Year Total (avg salary $100K)
Pre-2013	0.8%	~$20,400	~$24,000
2013 (FERS-RAE)	3.1%	~$79,050	~$93,000
2014+ (FERS-FRAE)	4.4%	~$112,200	~$132,000

What the Pension Pays

High-3 Salary	Standard (1%)	Age 62+ Bonus (1.1%)
$80,000	$24,000/yr	$26,400/yr
$100,000	$30,000/yr	$33,000/yr
$120,000	$36,000/yr	$39,600/yr
$150,000	$45,000/yr	$49,500/yr

These payments continue for life, with annual COLA adjustments starting at age 62.

The Break-Even

Pre-2013 hire, 30 years, $100K high-3:

• Total contributions: ~$24,000
• Annual pension: $30,000
• Break-even: 9.6 months
• After 20 years of retirement: $600,000+ received vs $24,000 contributed

Post-2013 hire, 30 years, $100K high-3:

• Total contributions: ~$132,000
• Annual pension: $30,000
• Break-even: 4.4 years
• After 20 years of retirement: $600,000+ received vs $132,000 contributed

Run your own numbers with the FERS Retirement Calculator.

The Elephant in the Room: Your Employer Pays 95% of the Cost

Here's what most "FERS is bad" arguments miss.

Your 0.8% contribution (pre-2013) is not funding your pension. The government contributes 17.3% of your salary to the pension fund on your behalf. You just never see it on your pay stub.

Over a 30-year career at an average salary of $85,000, the government puts roughly $442,000 into your pension fund. Your $20,400 is a rounding error. The pension's value comes from the employer match, not your personal contribution.

Saying "I could invest 0.8% better myself" is like saying your employer's 401(k) match is worthless because you only contribute 3%.

Even for post-2013 hires at 4.4%, the government still contributes 15.5%. You're paying roughly one-fifth of the pension's cost. The other four-fifths are free money.

The Portfolio Equivalency Test

How much would you need in your TSP to replace the pension? Using the widely accepted 4% withdrawal rule (the amount you can safely withdraw annually without running out of money over a 30-year retirement):

FERS Pension Amount	Equivalent Portfolio Needed
$20,000/year	$500,000
$25,000/year	$625,000
$30,000/year	$750,000
$40,000/year	$1,000,000
$50,000/year	$1,250,000

A GS-13 with 30 years and a $115,000 high-3 average earns a pension of $34,500/year. That's equivalent to an $862,500 portfolio, and the pension carries zero market risk. It never runs out. It adjusts for inflation (partially). And it continues for your spouse if you elect survivor benefits.

At a more conservative 3% withdrawal rate, that same $30,000 pension is worth $1 million.

Pension vs. Investing Your Contributions in the C Fund

This is the comparison the FIRE community loves. What if you invested your FERS contributions in the TSP C Fund instead?

Pre-2013 Hire (0.8%)

	C Fund Alternative	FERS Pension
30-year total invested	$20,400	$20,400
Estimated balance (11.4% avg return)	~$95,000	N/A
Net present value	~$95,000	~$550,000-$750,000
Market risk	Yes	None

The pension wins by a factor of 6-8x. At 0.8%, there simply is not enough money to compound into anything meaningful.

Post-2013 Hire (4.4%)

	C Fund Alternative	FERS Pension
30-year total invested	$112,200	$112,200
Estimated balance (11.4% avg return)	~$525,000	N/A
Net present value	~$525,000	~$550,000-$750,000
Market risk	Yes	None

Closer, but the pension still wins. And the pension carries zero sequence-of-returns risk. A bear market at retirement can't cut your pension in half. It can destroy your C Fund balance.

Four Career Scenarios

Scenario 1: Full Career (Hired at 22, Retires at MRA 57 with 35 Years)

• High-3: $130,000 (GS-14 Step 10, DC)
• Pension: $45,500/year (1% x $130K x 35), no reduction
• FERS Supplement until 62: ~$21,600/year
• Total pre-TSP income at 57: ~$67,100/year
• Equivalent portfolio: $1,137,500
• Employee contributions (pre-2013): ~$28,000
• Verdict: The sweet spot. This is the retirement path FERS was designed for.

Scenario 2: Mid-Career (20 Years, Retires at 60)

• High-3: $115,000 (GS-13 Step 10)
• Pension: $23,000/year (1% x $115K x 20), no reduction at 60+20
• Equivalent portfolio: $575,000
• Verdict: Solid. Not as dramatic, but $23K/year guaranteed income with COLA is a strong foundation. Add Social Security and TSP for a comfortable retirement.

Scenario 3: Late Start (Hired at 40, Retires at 62 with 22 Years)

• High-3: $105,000 (GS-12 Step 10)
• Pension: $25,410/year (1.1% x $105K x 22, gets the age-62 bonus)
• Equivalent portfolio: $635,250
• Verdict: Great deal, especially with the 1.1% multiplier. The pension replaces 24% of income by itself.

Scenario 4: The Short-Timer (10 Years, Then Private Sector)

• High-3 at separation: $95,000
• Deferred pension at 62: $9,500/year (1% x $95K x 10)
• WARNING: The deferred pension is based on your salary when you leave, not inflation-adjusted. If you leave at 35, that $9,500 could have the purchasing power of ~$5,000 by age 62.
• Verdict: Weakest scenario. For short-timers, TSP portability and Social Security credits are more valuable than the pension itself. Consider whether you'd be better off taking a refund of contributions.

The Three-Legged Stool: Total Retirement Value

The biggest mistake in the "FERS is bad" argument is judging the pension in isolation. FERS was designed as a three-part system:

Leg	Typical Value (30 yrs, $100K high-3)	Who Funds It
FERS Pension	$30,000-$33,000/year	Agency (17.3%) + You (0.8-4.4%)
Social Security	$25,000-$35,000/year	You (6.2%) + Agency (6.2%)
TSP (with 5% match)	Varies ($1M+ possible)	You + Agency (5% match)
Total	$80,000-$100,000+/year

The 2024 CBO report found that federal retirement benefits cost 43% more per hour than private sector benefits. Federal wages are 10% lower, but total compensation is 5% higher across all education levels.

Only 15% of private sector workers still have access to a defined benefit pension. You have one, plus a TSP with 5% match, plus Social Security. That combination is rare.

The COLA Reality Check

Let's be honest about the pension's biggest weakness.

FERS COLAs are reduced compared to CSRS and Social Security:

Inflation Rate	CSRS/Social Security COLA	FERS COLA	Gap
2.0% or less	Full CPI	Full CPI	None
3.0%	3.0%	2.0%	-1.0%
4.0%	4.0%	3.0%	-1.0%
6.0%	6.0%	5.0%	-1.0%

Over 25 years at 3% average inflation, your FERS pension loses roughly 22% of its purchasing power compared to a fully indexed benefit. A $30,000 pension in year one feels like $23,000 in year 25.

This is real. Don't let anyone tell you it doesn't matter.

But context matters too. Your Social Security benefit gets the full COLA. Your TSP withdrawals can be adjusted annually. The three-legged stool was specifically designed so the pension's COLA limitation is offset by the other two legs.

Also important: FERS retirees who retire before 62 get zero COLA until they turn 62. An MRA retiree at 57 loses 5 years of inflation protection. At 3% inflation, that's about $4,500 in lost purchasing power on a $30,000 pension.

What Congress Tried to Cut in 2025 (And Failed)

In the 2025 budget reconciliation, Congress attempted to:

1. Increase all FERS contributions to 4.4% for every employee
2. Switch from high-3 to high-5 salary averaging
3. Eliminate the FERS supplement entirely
4. Further reduce COLAs

The Senate parliamentarian struck down ALL major federal worker provisions under the Byrd rule. The final law (OBBBA, signed July 4, 2025) made zero changes to the FERS pension formula, contribution rates, or COLA structure.

Your pension has survived every attempted cut since FERS was created in 1987. That doesn't guarantee future safety, but it's a strong track record.

The Survivor Benefit Decision

The survivor benefit costs 10% of your pension but provides 50% of your annuity to your spouse for life. Is it worth it?

Option	Your Pension	Spouse Gets	Example ($40K pension)
Full Survivor	Reduced 10%	50% of annuity	You: $36,000. Spouse: $20,000/yr
Partial	Reduced 5%	25% of annuity	You: $38,000. Spouse: $10,000/yr
None	Full amount	Nothing	You: $40,000. Spouse: $0

For most couples, the full survivor benefit is worth it. The math is straightforward: if you pay $4,000/year in reduced pension and your spouse collects $20,000/year for even 10 years after your death, that's a 5:1 return.

But here's the detail most analyses miss: the survivor benefit preserves your spouse's FEHB health insurance eligibility. Without any survivor annuity, your spouse loses federal health coverage at your death. Replacing FEHB on the private market costs $15,000-$25,000/year, especially before Medicare eligibility at 65.

The FEHB preservation alone makes the survivor benefit worth electing for most married couples.

Bottom Line: Is the FERS Pension Worth It?

Yes. For most federal employees, the FERS pension is one of the best retirement deals available in the American workforce.

The math is straightforward. You contribute 0.8-4.4% of your salary. The government kicks in 15-17% more on your behalf. The result is a guaranteed income stream for life that would take $500,000 to $1,000,000+ to replicate in a private portfolio.

The pension's weakness is real: the diet COLA erodes purchasing power, MRA+10 retirement carries a steep penalty, and deferred pensions lose value to inflation. But these weaknesses are specific to certain scenarios, not the pension itself.

The strongest play: work 30+ years, retire at MRA or later, elect survivor benefits, and stack the pension on top of a fully funded TSP and Social Security. That three-legged stool is what makes FERS work.

Estimate Your FERS Pension

Use our free FERS Retirement Calculator to see exactly what your pension is worth based on your years of service, high-3 salary, and retirement age. Model different scenarios and see how the 1.1% multiplier at age 62 changes your numbers. Calculate your pension now →

Frequently Asked Questions

How much do I contribute to my FERS pension?

It depends on when you were hired. Pre-2013: 0.8% of basic pay. Hired in 2013: 3.1%. Hired 2014 or later: 4.4%. Your agency contributes an additional 15.5-17.3% on your behalf. Source: OPM.gov.

How long until I earn back what I paid into FERS?

For pre-2013 hires (0.8%), the break-even is less than 1 year of retirement. For post-2013 hires (4.4%), it's roughly 3-5 years. After that, every pension payment is pure return. Use the FERS Retirement Calculator to see your specific numbers.

What is my FERS pension worth as a lump sum?

Using the 4% withdrawal rule, divide your annual pension by 0.04. A $30,000/year pension equals $750,000. A $40,000/year pension equals $1,000,000. The pension is actually worth more because it's guaranteed for life with COLA, while a portfolio can run out.

Would I do better investing my FERS contributions in the TSP C Fund?

No. Your 0.8% contribution over 30 years would grow to about $95,000 in the C Fund. The pension's net present value is $550,000-$750,000. Even at 4.4%, the C Fund balance (~$525K) falls short of the pension value, and carries market risk the pension doesn't.

Does the FERS COLA keep up with inflation?

Not fully. If inflation exceeds 2%, the FERS COLA is reduced (capped at 2% for CPI of 2-3%, or CPI minus 1% for CPI above 3%). Over 25 years, this erodes purchasing power by roughly 22%. However, your Social Security benefit gets the full COLA, partially offsetting this gap.

Related Resources

• FERS Retirement Calculator: Model your pension with different scenarios
• High-3 Salary Calculator: Calculate the salary average that drives your pension
• TSP Calculator: Project your TSP growth alongside your pension
• FERS Retirement Guide: Complete FERS rules and eligibility
• FERS vs CSRS Comparison: Side-by-side comparison of both systems
• FERS Supplement Guide: Eligibility and earnings test for the bridge benefit
• Best TSP Allocation 2026: Fund strategies to complement your pension
• Deferred vs Postponed Retirement: Options if you leave federal service early

Sources: OPM.gov, CBO 2024 Report, FedSmith, GovExec, AFGE, TSPfolio