Federal employee retirement: FERS, CSRS, and TSP
How federal pensions and the Thrift Savings Plan work. Contribution strategy and TSP fund choices.
- FERS (Federal Employees Retirement System)
- The retirement system covering federal employees hired since 1987. Includes Social Security, a small defined-benefit pension, and the TSP.
- Example: A FERS employee retiring at 62 with 30 years of service receives roughly 30% of their high-3 salary as pension, plus Social Security and TSP withdrawals.
- CSRS (Civil Service Retirement System)
- The older federal retirement system for employees hired before 1987. Larger defined-benefit pension, no Social Security from federal service.
- Example: A CSRS employee with 30 years of service receives ~56% of their high-3 salary as pension.
- TSP (Thrift Savings Plan)
- The federal government's 401(k)-equivalent retirement plan with extremely low expense ratios (0.04-0.05%) and limited fund choices.
- Example: TSP's C Fund tracks the S&P 500 at an expense ratio of ~0.05% — among the lowest in the world.
Federal employees have one of the best retirement systems available — but it requires understanding three components: pension, Social Security, and TSP. Most federal employees underutilize the TSP because the pension feels like enough.
FERS three-part structure
FERS consists of: (1) Social Security (same rules as private sector), (2) a defined-benefit pension calculated as years × high-3 average × 1% (or 1.1% if retiring at 62+ with 20+ years), and (3) the TSP. The pension alone replaces 30-40% of pre-retirement income; combined with Social Security, ~55-65%. The TSP fills the gap to the recommended 80-100% replacement.
TSP contribution strategy
2026 limits: $23,000 employee + $7,500 catch-up at 50+. Government matches up to 5% of salary (1% automatic + 4% match). Always contribute at least 5% to capture the full match — anything less leaves money on the table. Beyond that, prioritize the Roth TSP for younger employees expecting to be in higher brackets later.
TSP fund selection
Five core funds: G (government securities, no risk, low return), F (bonds), C (S&P 500), S (small/mid cap), I (international). Plus Lifecycle (L) target-date funds. The TSP is one of the cheapest places to own index funds anywhere — expense ratios near 0.05%. Most federal employees should use a mix of C, S, and I (e.g., 60/20/20) or a Lifecycle fund.
CSRS specifics
CSRS employees (hired pre-1987) receive a much larger pension (~56% of high-3 at 30 years) but no FERS-style Social Security from federal service. CSRS Offset and CSRS Trans systems exist for employees who switched. Most active employees today are FERS; CSRS questions usually involve retiring or already-retired workers.
Special retirement supplement (SRS)
FERS employees who retire before age 62 receive a Special Retirement Supplement that approximates the Social Security benefit they would have earned, paid until age 62. This is a unique federal benefit for early retirees that should be factored into retirement planning.
Frequently asked questions
Should I roll my TSP to an IRA after retiring?
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Are TSP withdrawals taxed as ordinary income?
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Can I contribute to a Roth IRA in addition to TSP?
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Plug in your own amounts with our free calculators.