Annuity Awareness for FERS Employees

Annuity awareness isn’t just for financial advisors—it’s for you, the everyday federal employee who’s worked hard for your future. And here’s the truth: if you’re a FERS employee, annuities are already part of your retirement—whether you realize it or not.

This month, let’s clear the fog around annuities, what they mean for your benefits, and how to use them wisely.

What Is Annuity Awareness—and Why Should You Care?

Annuity awareness means understanding how guaranteed income fits into your retirement picture.

Think of your retirement like a 3-legged stool:

1. FERS Annuity (the pension)

2. Social Security

3. Thrift Savings Plan (TSP)
   

But here’s where most folks miss out: your FERS basic annuity is only one kind, and you might want to add a personal annuity for more income security. Especially if:

• You’re retiring before age 62

• You’re single or the primary earner

• You’re worried about outliving your savings
  
  

Chris’s story:
Chris, a 58-year-old federal employee, planned to rely on his TSP and FERS pension. But once we ran the numbers, we saw he’d face a $1,100/month gap between age 62 and 67. A personal annuity filled the gap—and let him retire on his terms.

How Your FERS Annuity Really Works

Your FERS annuity is a government-guaranteed stream of income based on:

• Your high-3 salary

• Your years of service

• A multiplier (under age 62 is 1% and 62 or older is 1.1%)
  
  

Here’s the basic formula:
High-3 Average Salary × Years of Service × Age Multiplier = Annual Pension

But here’s the kicker: the FERS annuity alone often doesn’t replace your full income. That’s where personal annuities or income bridges come in.

Should You Add a Personal Annuity?

Let’s break it down. Personal annuities are contracts with insurance companies that turn part of your savings into guaranteed monthly income, usually for life.

Here’s when they can make sense:

• You want predictable income, even if the market drops

• You’re unsure if your TSP will last 30+ years

• You want to cover basic expenses with guaranteed income
  

Think of a personal annuity like building a fourth leg on your stool—a stronger base for your lifestyle.

The Downsides? Let’s Be Honest.

Not every annuity is a win. 

Pro tip: Interest rates change, so it best to consult with a trusted person well versed in annuities. 

And never go it alone. I’ve seen too many people buy the wrong product because a salesperson made it sound good.

What Happens If You Do Nothing?

If you ignore annuity awareness, you might:

• Retire with a surprise income gap

• Drain your TSP faster than planned

• Rely too much on Social Security

That’s the difference awareness makes—it lets you plan, not guess.

Want more help? Read this next:
FERS DEFINED: A Federal Retirement Consultant’s Perspective vs. The Government Definition

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Text me at 813-686-2208 or head over to JustCallMelinda.com. II’ll help you create a tax-smart plan that supports your long-term retirement income goals.