How Much Money Do I Need to Retire as a Federal Employee? (FERS + TSP + Social Security) — 2026 Guide
Last reviewed: September 2026 · Educational, not individual advice
Take the annual spending you want in retirement, subtract your FERS pension and Social Security, and multiply the gap by 25. That is your TSP target. Because a FERS pension covers much of your spending, you need far less saved than generic calculators claim, and the gap shrinks again at 62, when the multiplier rises to 1.1%.
It is the question that keeps you up at night: "Do I have enough?" You have contributed to the TSP for 20 or 30 years, your FERS pension is building, and nobody has given you a straight answer. There is no single magic number, but there is a systematic way to calculate yours. This guide walks through it with three scenarios and a hypothetical composite couple, Sam and Dan, who are not clients.
The quick answer
Rule of thumb: desired annual retirement spending, minus your FERS pension and Social Security, times 25. That is the flip side of the 4% rule, because 1 divided by 0.04 is 25.
The rest of this guide explains why that number is different for federal employees, how to compute each piece, and where the rule of thumb needs adjusting.
Why federal employees need less than online calculators say
Most retirement calculators assume you fund everything from savings and Social Security. You have a FERS pension, and that changes the math.
| Private-sector employee | Federal employee | |
|---|---|---|
| Social Security | $32,000 | $32,000 |
| FERS pension | $0 | $45,000 |
| Needed from savings each year | $88,000 | $43,000 |
| Savings target (gap × 25) | $2,200,000 | $1,075,000 |
Same lifestyle, about $1.1 million less required. Calculators that ignore the pension tell federal employees they are far behind when they are not.
What determines your number?
Your annual spending in retirement. Not what you spend now, what you will spend. Mortgage, commuting, TSP contributions, and work costs often fall away; healthcare before Medicare, travel, and help for children and grandchildren often rise. Most retirees land at 70% to 90% of pre-retirement income.
Your retirement age. Earlier means three things: the money must last longer (retire at 62 and plan for 30 to 35 years), the pension is smaller because each year adds about 1% of high-3, and Social Security is reduced if claimed early.
Inflation over 30-plus years. If you need $60,000 a year today, in 30 years you will need about $108,700 at 2% inflation or $145,600 at 3%. That is why a retirement portfolio cannot live entirely in the G Fund.
Your personal retirement number: the formula
Step 1: annual expenses. Start with current spending, subtract what disappears (mortgage if it will be paid off, TSP contributions, commuting), add what rises (pre-65 healthcare, travel, hobbies, family help).
Step 2: pension and Social Security income.
| Situation at retirement | Multiplier | 30 years × $150,000 high-3 |
|---|---|---|
| Under 62, or 62+ with fewer than 20 years | 1.0% × years × high-3 | $45,000 a year |
| Age 62 or older with 20+ years of service | 1.1% × years × high-3 | $49,500 a year |
The 1.1% rule is the most common thing federal employees leave out of their own math. Retiring on your 62nd birthday instead of at 61 with 20 or more years raises the pension by 10% for life, before survivor-benefit elections. Unused sick leave adds service time; military time counts only if bought back.
| Claim at | Share of full benefit | If full benefit is $32,000 |
|---|---|---|
| 62 | 70% | $22,400 |
| 67 | 100% | $32,000 |
| 70 | 124% | $39,680 |
Check your own estimate at ssa.gov/myaccount. If you retire before 62 on an immediate annuity, the FERS supplement fills part of the gap to 62; include it in the bridge years only.
Step 3: the gap. Annual expenses minus pension and Social Security income.
Step 4: the target. Gap × 25. Example: a $43,000 gap × 25 = $1,075,000.
What is the 4% rule, and should you use it?
The 4% rule says you can withdraw 4% of your portfolio in the first year of retirement, raise that dollar amount with inflation each year, and have a high probability the money lasts 30 years. In the historical research it succeeded in roughly nine out of ten rolling 30-year periods for a balanced portfolio.
For federal employees we typically use 4% for a balanced portfolio (about 60/40), 3.5% for a conservative one or a very early retirement, and up to 4.5% for a household with flexibility to cut spending in a bad market. The pension is the reason for the flexibility: even if the portfolio has a bad decade, the annuity keeps arriving.
Three scenarios, recomputed
All three retirees below are 62 or older with 20-plus years, so the 1.1% multiplier applies. Hypothetical.
| Frugal retiree | Comfortable retiree | Lifestyle retiree | |
|---|---|---|---|
| Retires at / years of service | 62 / 30 | 67 / 35 | 62 / 32 |
| High-3 | $100,000 | $140,000 | $160,000 |
| FERS pension | $33,000 | $53,900 | $56,320 |
| Social Security | $22,000 at 62 | $35,000 at 67 | $48,000 at 70 |
| Annual expenses | $60,000 | $95,000 | $130,000 |
| Annual gap | $5,000 | $6,100 | $73,680 until 70, then $25,680 |
| TSP target | $125,000 | $152,500 | about $1.3 million (see below) |
The lifestyle retiree shows why a single ×25 misleads early retirees who delay Social Security. Multiplying the bridge-year gap by 25 gives $1.84 million, far too much, because that gap lasts eight years, not thirty. The better method: fund the bridge years directly (8 × $73,680, about $640,000 after inflation) and apply ×25 only to the permanent gap after 70 ($25,680 × 25 = $642,000). Total: roughly $1.3 million.
Sam and Dan: a bridge-years example
Sam retires from NIH at 57 with 31 years and a $170,000 high-3. Under 62, the multiplier is 1%: a $52,700 pension. The FERS supplement adds about $1,500 a month until 62. Dan keeps his private-sector job until 62. They want $130,000 a year.
- 57 to 62: pension $52,700 + supplement $18,000 + Dan's salary. Gap covered without touching the TSP.
- 62 to 70: supplement ends; Dan retires; they delay both Social Security benefits to 70. Gap of roughly $77,000 a year, funded from the TSP and a taxable account, which is also their window for Roth conversions in the gap years.
- 70 onward: two Social Security benefits of about $70,000 combined; gap drops to about $7,000.
Their number is about $700,000 for the bridge plus $175,000 for the permanent gap, so roughly $900,000, which their TSP already covers. The order of decisions matters as much as the total; when to claim Social Security and how to build retirement income without a single magic investment cover the next layer.
"But I'm behind. Now what?"
Work a few more years. Each year adds about 1% of high-3 to the pension (1.1% once you pass 62 with 20 years), lets the TSP grow, shortens the drawdown, and raises Social Security. Working from 62 to 65 on a $150,000 high-3 adds about $4,950 a year of pension for life and lets an $800,000 TSP grow to about $950,000 at 6%, plus new contributions.
Reduce expenses. Every $10,000 cut from annual spending lowers the target by $250,000. Downsizing, moving, or paying off the mortgage before retiring all count.
Delay Social Security to 70. In the illustration above, $24,000 at 62 versus $42,000 at 70 is $18,000 a year, which is $450,000 less TSP needed, with the pension and TSP bridging the years between.
Work part-time. Even $15,000 a year for the first five years takes pressure off the portfolio. If you receive the FERS supplement, keep the earnings test in mind.
What about Maryland taxes?
The three income legs are not taxed alike. Maryland does not tax Social Security. A FERS annuity qualifies for Maryland's pension exclusion once you are 65 (or disabled), which shelters a meaningful slice from state tax. TSP withdrawals get no exclusion and are taxed as ordinary income at state and county rates. So for a Maryland retiree, a dollar of pension or Social Security goes further than a dollar of TSP, which favors delaying Social Security and keeping the TSP as the flexible leg. Our guide to how every state taxes retirement income has the current exclusion amount.
The bottom line
(Annual expenses − FERS pension − Social Security) × 25 = your savings target, with the bridge years funded separately if you retire before Social Security. Some federal employees can retire comfortably on $500,000; others need $2 million. It depends on lifestyle, the pension, claiming age, the mortgage, and health. The advantage is that the FERS pension does most of the work, and getting the 1.1% multiplier and the claiming age right can move the number by hundreds of thousands. Avoiding the five biggest federal retirement mistakes protects it; Medicare Part B with FEHB is the next decision after 65.
Ready for a precise answer? We help federal employees in Maryland and the DC metro calculate their number and build the plan to reach it. Book a call, or start with the other guides for federal employees. "Enough" is not a guess; it is a number.
FAQ: the federal retirement number
How is the FERS pension calculated?
Years of creditable service times your high-3 average salary times 1%. If you retire at 62 or older with at least 20 years of service, the multiplier is 1.1%. Thirty years on a $150,000 high-3 is $45,000 a year at 61 and $49,500 at 62, before any survivor-benefit reduction.
Does the 4% rule work if I have a pension?
Yes, and it works better. Apply the rule only to the gap your savings must fill after the pension and Social Security. Because the pension keeps paying in a bad market, a FERS retiree can usually tolerate a 4% or even 4.5% withdrawal rate that a savings-only retiree could not.
How much TSP do I need with a $50,000 FERS pension?
Subtract the pension and your Social Security from your annual spending, then multiply by 25. With $50,000 of pension, $30,000 of Social Security, and $100,000 of spending, the gap is $20,000 and the target is about $500,000. Fund any years before Social Security starts separately.
When should a federal employee claim Social Security?
Often at 70 if the pension and TSP can cover the years in between. Waiting from 62 to 70 raises the monthly benefit by about 77%, and Maryland does not tax Social Security. Claim earlier when health, a spouse's benefit, or cash flow make waiting impractical.
Does Maryland tax my FERS pension?
Partly. Maryland's pension exclusion lets taxpayers 65 or older, or disabled, exclude a set amount of pension income, and a FERS annuity qualifies. Social Security is not taxed by Maryland at all. TSP withdrawals get no exclusion and are taxed at state and county rates like wages.
Sources
- OPM, FERS annuity computation
- SSA, retirement age and benefit reductions and credits
- TSP, calculators including the Federal Ballpark E$timate
- Bengen, W.P. (1994), Determining Withdrawal Rates Using Historical Data, Journal of Financial Planning
- Maryland Comptroller, pension exclusion
Footnotes: the "Rule of 25" is the inverse of the 4% rule (1 ÷ 0.04 = 25). SSA's 2022 period life table shows remaining life expectancy at 62 of about 19.6 years (male) and 22.5 years (female), and at 67 of about 16.1 and 18.6; plans commonly use 25 to 35 years to manage longevity risk. The Trinity study updates report the 4% rate surviving roughly 95% of rolling 30-year periods for a 50/50 portfolio.
This article is for educational purposes only and does not constitute financial advice. Sam and Dan are a hypothetical composite household, not clients. Federal benefits and regulations change; confirm your figures with OPM, SSA, and a professional who understands federal benefits.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities and investment advisory services offered through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial. LPLE and LPL Financial are not affiliated with Allset Wealth.