Alright, let’s talk about the High-3 salary, because if you’re a federal employee, this is one of the most important numbers in your retirement plan. And no, it’s not some secret government code—it’s actually pretty simple. The High-3 is the average of your three highest-paid years of service.
Sounds straightforward, right?
But here’s the thing: it plays a huge role in determining how much you’ll get from your pension.
Let’s break it down in plain English. Imagine we’re just chatting over coffee, and I’m explaining it to you like I would to a friend.
Okay, So What Exactly Is the High-3?
The High-3 salary is exactly what it sounds like: the average of your three best years of federal pay. But here’s the catch—it doesn’t have to be your last three years, just your highest-earning ones. For most people, this usually is their final years because that’s when you’re likely earning the most (thanks, promotions!).
Let’s say your salary looked like this over your career:
- Year 1: $50,000
- Year 20: $90,000
- Year 30: $120,000
Your High-3 isn’t just your last three years at $120,000. It’s calculated as an average of your highest-earning three consecutive years. So, if you made $115,000, $118,000, and $120,000 in your last three years, that’s your High-3. Easy math: $353,000 divided by 3 = $117,666.
Why Does This Number Matter?
This is where it gets fun (well, as fun as pensions can be). Your pension is directly based on your High-3. It’s the foundation for the formula that decides how much you’ll get every month after you retire. Here’s how it works:
- FERS Pension Formula:High-3 salary × Years of service × Multiplier (usually 1% or 1.1%).
Now imagine if you’d spent your last three years in a lower-paying position. Your High-3 could drop, which means a smaller pension. That’s why this number matters—a lot.
Can You Boost Your High-3?
Here’s the good news: you have some control over your High-3. If you’re a few years away from retirement, this is the time to maximize your earnings. Promotions? Overtime? Details? All of that counts. The higher your pay during those three years, the more money you’ll have coming in during retirement.
And hey, if you’re in a position where you can’t bump up your salary, don’t stress too much. Your pension isn’t the only part of your retirement plan (hello, TSP and Social Security!).
Let’s Talk Real Life
Picture this: your coworker Susan gets a big promotion in her last five years of work. Her salary jumps from $90,000 to $120,000. That extra income boosts her High-3, which means her pension grows significantly. On the flip side, your buddy Mike decides to switch to a lower-stress job in his last three years, earning less than he used to. His High-3 will take a hit, which means a smaller pension check.
It’s all about timing and strategy. The more you plan, the better off you’ll be.
The Bottom Line
Your High-3 salary is a big deal for your pension. It’s like the magic number that sets the stage for your retirement income. The higher it is, the more you’ll be able to relax and enjoy those golden years.
So, if you’re still working, think about ways to maximize your earnings in your final years of service. And if you’re getting ready to retire? Congratulations—you’ve earned it. Now it’s just about making sure your High-3 works as hard for you as you’ve worked for it.
Need help figuring out what your High-3 is?
Or how it fits into your retirement plan? Let’s chat—I’ve got plenty more where this came from.
