$35 an Hour: What One More Year in FERS Really Pays
Last Updated: July 5, 2026
The moment you qualify for an immediate, unreduced FERS annuity, your salary stops meaning what you think it means. Working past FERS eligibility pays you your salary minus the pension you could already be collecting for doing nothing, and for a typical 30-year employee that nets out near half. Here's the math, three worked profiles, and the one year where the answer flips.
The Formula Nobody Runs
Retiring the day you're eligible hands you two income streams for free: your FERS annuity and, if you're under 62, the FERS Special Retirement Supplement. Working another year means giving both up in exchange for your salary.
Marginal-year net cash = salary − forgone pension − forgone supplement
That difference is the only new money the year produces. On top of it you earn two smaller things: a permanent pension bump (1% of high-3 for the extra year) and the 5% TSP agency match. Everything else, including growth on your existing TSP, you get whether you work or not.
Three Profiles, Run Honestly
All figures are illustrative FedTools 2026 estimates. High-3 is the average of your highest 36 consecutive months of basic pay, so your current salary usually sits slightly above it, which makes these rates a touch generous.
| Profile | Years | Forgone pension | Forgone supplement | Marginal year nets | Permanent bump |
|---|---|---|---|---|---|
| GS-13, age 57 (MRA+30) | 30 | 30% of high-3 | ~14% of salary | ~56% of salary | +$1,300/yr |
| GS-12, age 60 | 28 | 28% | ~15% | ~57% | +$1,050/yr |
| LEO/ATC (6c), age 50 | 25 | 39% | ~11% | ~50% | +$1,400/yr |
| LEO/ATC (6c) | 28 | 42% | ~11% | ~47% | +1.0% only |
| GS-13, age 62+ | 30 | 33% | none | ~67% | +1.1% |
Walk through the first row. A GS-13 step 8 with a $130,000 high-3 and 30 years qualifies for a $39,000 pension plus roughly $18,000 in supplement: $57,000 a year for zero hours worked. Work year 31 and you earn $130,000 but give up the $57,000. New cash: $73,000. Divide by 2,080 hours and the marginal wage is about $35 an hour, against a $62.50 headline rate.
The question stops being "can I afford to retire" and becomes "is another year of my life worth $35 an hour."
Why Special-Provision Employees Feel It Worst
The 6c crowd (law enforcement, firefighters, air traffic controllers) gets an enhanced 1.7% multiplier, but only on the first 20 years. Past 20, each year adds a plain 1.0%.
So at 25 years, a special-provision employee has already banked 39% of high-3, draws the supplement immediately with no earnings test until MRA, and earns just 1.0% for staying. On a $140,000 high-3, the marginal year nets $69,650: 49.75% of salary, almost exactly half. By 28 years it slides to ~47% and keeps falling, with a mandatory retirement wall at 56 or 57 waiting regardless. The full special-provision picture is in our 6c retirement guide.
The One Year That Flips the Math: 61 to 62
At age 62 with 20+ years, the FERS multiplier rises from 1.0% to 1.1%, and it applies to every year you ever worked, not just the new one.
- Retire at 61 with 29 years: 1.0% × $130,000 × 29 = $37,700/yr
- Retire at 62 with 30 years: 1.1% × $130,000 × 30 = $42,900/yr
That single year adds $5,200 a year for life, a 13.8% bigger pension. About $1,300 of it is the extra service year; the other $3,900 is the retroactive uplift on the 29 years you already had. And at 62 the supplement question disappears (it ends at 62 anyway), so the marginal rate improves to ~67%.
"Work to 62" and "keep working past eligibility" are different decisions. The first is often right. The second usually isn't. The supplement and 62-cliff timing guide covers the crossover in detail.
The TSP Myth That Keeps People at Their Desks
Myth: "Another year of work means another year of TSP growth."
Reality: Your TSP balance rides the market whether you're employed or retired. Nothing forces you to withdraw at retirement, and the balance compounds untouched either way. The only TSP money contingent on working is:
- The 5% agency match, about $6,500 a year on a $130,000 salary. Real money, and it belongs in the marginal-year math.
- Your own contributions, which are your paycheck moving between your own pockets, plus tax deferral.
Counting growth on the whole balance as a reason to stay is double-counting money you already have.
Five Things That Legitimately Change the Answer
- The FEHB 5-year rule, if you haven't met it. Carrying FEHB into retirement requires 5 years of continuous enrollment before retiring. If you're short, working to that line is worth $5,000 to $7,000 a year for life. If you've met it, FEHB is not a reason to stay. You keep it by retiring.
- A big sick-leave balance weakens the case for staying. Unused sick leave counts 100% toward your annuity computation. Sitting on 1,500+ hours means you've already banked most of another service year without working it.
- The 62 cliff, covered above.
- Survivor elections. A higher base annuity raises the survivor annuity too, so the pension bump is worth roughly 1.5× its face value if you're covering a spouse.
- Sequence-of-returns risk. Retiring into a down market and drawing TSP immediately locks in losses. Working through a downturn is a legitimate risk-management call, but it's about withdrawal timing, not the pension formula.
And one quiet subtraction: the marginal year's salary still pays the 4.4% FERS deduction (for FRAE hires) and 6.2% Social Security tax, which pension income doesn't. After tax and deductions, the real marginal rate sits below the gross figures above.
Calculate Your Own Marginal Year
Use our free FERS Retirement Date Optimizer to compare retire-now against one-more-year with your actual grade, years, and high-3. The FERS Retirement Calculator prices the annuity itself, the High-3 Calculator pins down your average, and the FERS SRS Calculator shows the supplement you'd be forgoing.
Frequently Asked Questions
How much is one more year actually worth once I'm eligible?
Your salary minus the pension and supplement you're giving up: roughly 52% to 57% of salary for a typical under-62 case, plus a ~1% permanent pension bump and the 5% TSP match.
Is the "half your salary" claim from Reddit true?
Directionally yes. The real range is about 45% to 67%. Long-service and special-provision employees land closest to half; the post-62 case is the most favorable.
Why does this hit LEOs and controllers hardest?
Their 1.7% multiplier is exhausted at 20 years, so each additional year adds only 1.0% while the forgone pension is already 39%+ of high-3. Mandatory retirement at 56/57 caps the runway anyway.
What's the effective hourly wage of my marginal year?
Divide the new cash by about 2,080 hours. For a GS-13 near 30 years, that's roughly $35 an hour against a $62.50 headline rate.
Does the supplement have an earnings test?
Yes. In 2026 the supplement shrinks $1 for every $2 you earn above $24,480, and it ends at 62 regardless. Special-provision retirees are exempt from the test until they reach MRA.
Related Resources
- FERS Retirement Date Optimizer: Model retire-now vs one-more-year with your numbers.
- Is the FERS Pension Worth It?: The value of the pension you'd be starting.
- Retiring at 57 vs 60 vs 62: How the age gates change the payout.
- Best Dates to Retire in 2026: Once you decide to go, when to actually leave.
Sources: OPM FERS Computation, OPM CSRS/FERS Handbook Ch. 51, OPM Creditable Service, TSP.gov, FedWeek, GovExec.