Your High-3 Calculation Could Make or Break Your FERS Retirement—Here’s How to Get It Right

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Key Takeaways

Your FERS annuity is directly tied to your “high-3” average salary. Getting this number right is essential for securing long-term retirement income.
Strategic timing—such as delaying retirement by a few months—can significantly increase your annuity over the span of your retirement.

What the “High-3” Is—and Why It Matters

Under the Federal Employees Retirement System (FERS), your basic retirement annuity is calculated using your “high-3” average salary. This is the average of your highest-paid consecutive 36 months of basic pay.

Your high-3 isn’t just a formality—it forms the cornerstone of your future income. For many government employees, this average defines how comfortably they’ll live in retirement. Given that the typical FERS retiree receives about $1,810 monthly from the annuity, even small changes in your high-3 can make a noticeable difference.

What Counts Toward Your High-3

Your high-3 calculation includes only your basic pay. This means:

Overtime, bonuses, and awards are not included.
Locality pay and shift differentials do count, as they are considered part of your basic pay.
Special pay adjustments, such as those for law enforcement officers or air traffic controllers, also count.

It’s important to review your earnings statements and SF-50s to verify what pay is included and to ensure there are no errors. Incorrect classification of pay can result in a lower high-3 and thus a smaller annuity.

When Your High-3 Occurs

Your high-3 can happen at any point in your career—it doesn’t have to be your final three years. It just needs to be any three consecutive years where your basic pay was highest. For most, this tends to be the final stretch before retirement, especially if promotions or step increases occur late in your career.

However, if you’ve accepted a lower-paying position before retirement—such as shifting into a lower-grade job for less stress—your high-3 may come from an earlier period.

Why Timing Matters

Your high-3 average is not locked in until you retire. This means:

Delaying retirement by a few months to include a higher-paying period can permanently raise your pension.
Postponing step increases or foregoing promotions right before retirement can reduce your high-3.
Taking extended leave without pay during your final three years may lower your average.

You should aim to retire shortly after your final step increase or general pay adjustment to ensure these boosts are fully reflected in your average.

Understanding the Formula

Your FERS basic annuity is calculated as follows:

1% of your high-3 average salary multiplied by your years of creditable service.
1.1% if you retire at age 62 or later with at least 20 years of service.

For example, if your high-3 average is $90,000 and you have 30 years of service:

Retiring before age 62: 1% x $90,000 x 30 = $27,000/year
Retiring at 62 or older with 20+ years: 1.1% x $90,000 x 30 = $29,700/year

That 0.1% difference adds up. Over 20 years of retirement, it could mean an additional $54,000.

Mistakes That Can Hurt Your High-3

Several common missteps can reduce your high-3, leading to a smaller retirement check:

Accepting a lower-grade job late in your career.
Switching to part-time during your final years without checking the impact.
Extended unpaid leave or sabbaticals without understanding their effect on your average.
Incorrect earnings records that understate your actual basic pay.

Always request and review a Certified Summary of Federal Service and compare it to your personal records to spot any discrepancies early.

Tools to Help You Estimate

While the Office of Personnel Management (OPM) provides the final determination, you can run your own estimates using several tools:

SF-50s: Use these to identify periods of highest pay.
Earnings and Leave Statements: Confirm basic pay and ensure no overtime or bonuses are misclassified.
High-3 calculators: Use official or agency-provided calculators to estimate your average and see how small timing changes can impact it.

Using these tools allows you to make more informed decisions about your retirement date and employment choices.

Strategies to Improve Your High-3

If you still have time before retirement, several tactics can help boost your average:

Pursue step increases strategically.
Time retirement around general pay raises.
Avoid taking lower-paying details or reassignments in your final years.
Maximize locality pay by working in higher-cost areas if feasible.
Review and fix errors in your personnel records annually.

Each of these steps can result in a higher final annuity—potentially thousands more annually.

Impact of Unused Sick Leave

While unused sick leave doesn’t affect your high-3 calculation, it does increase your total years of creditable service. This can boost your pension when multiplied by your high-3 salary. Every 174 hours of unused sick leave equals one month of additional creditable service.

So if you’re a few months short of a higher annuity milestone, accrued sick leave could push you over the edge.

High-3 and Divorce Settlements

If you’re divorced, your high-3 calculation can affect how much of your annuity is subject to division under a court order. If your ex-spouse is entitled to a portion of your annuity based on your high-3, ensure your calculation is accurate and reflects your correct earning history.

You should consult your divorce decree and clarify how the benefit is apportioned, especially if it was based on earnings during a specific period.

Military Buyback and High-3

If you served in the military and are considering a military service credit deposit (buyback), it’s worth noting that your military time counts toward your years of creditable service but not toward your high-3 salary. However, since it can add years to your service calculation, your overall annuity amount increases significantly.

Just make sure to complete the buyback before you retire to receive full credit.

It’s worth remembering that the FERS Special Retirement Supplement—which bridges the gap until Social Security begins at 62—is not based on your high-3. Instead, it’s calculated using your estimated Social Security benefit and your years of FERS service.

So while the high-3 is crucial for your annuity, it does not affect every aspect of your retirement income.

Final Thoughts on Getting Your High-3 Right

Securing your highest possible high-3 average takes awareness, planning, and timing. Because your annuity is for life and often includes cost-of-living adjustments, even small differences compound significantly over time.

Take time now to:

Review your personnel and pay records.
Consider the timing of your retirement.
Work with your agency’s HR or benefits officer.

For tailored guidance, connect with a licensed professional listed on this website who can help you evaluate your personal situation and ensure your high-3 truly works in your favor.