Federal Pay Raise In 2022
Federal Pay Raises For 2022
A plan has been sent to Congressional leadership to provide civilian federal employees with an average of a 2.7% pay raise in 2022.
Based on this new plan, federal employees would receive a 2.2% increase in basic pay and would also receive an additional .5% raise in locality pay.
This 2.2% increase is well above the 1% increase civilian employees saw in 2021.
Most pay raises would be set to take effect the first pay period of January.
The proposed pay raise will be welcomed for all federal employees as households are contending with rising inflation which has eaten into wages.
For those approaching retirement, a pay increase can help you indirectly in a few areas (outside of just a larger paycheck).
How A Pay Raise Affects Your FERS Pension
First, for FERS employees, a pay raise will ultimately increase the High-3 average salary used for calculation purposes.
The end result is a higher pension for life.
As a reminder, the FERS pension is calculated using the following:
Years of Service * 1% * High-3 Average Salary
Or if age 62 and over with atleast 20 years of service the formula is:
Years of Service * 1.1% * High-3 Average Salary
How A Pay Raise Affects Your Thrift Savings Plan
The other area is TSP matching.
With a higher salary, and a matching contribution of up to 5% of basic pay, more money will be contributed to the TSP account.
OPM.gov has great tools and resources when it comes to maximizing the TSP.
Among these is “How Much Can I Contribute?”
This tool determines how much can be contributed each pay period, while ensuring you receive all matching amounts.
You won’t hit your annual contribution limit until the last pay period of the year.
And lastly, “How Much Will My Savings Grow” shows the amount you’ll have saved by the time you reach retirement.
With these changes happening, it might be a good idea to run your new retirement numbers with a financial professional.
If you’d like to learn more, schedule your complimentary federal benefits review and retirement analysis here with a licensed insurance professional.
For additional information, you can also contact your friends at GPIS by calling 866-201-7829 or by sending an e-mail to email@example.com.
-Sam Wiss, RICP
By responding to this offer, you may be contacted by a licensed insurance and financial professional regarding life insurance and/or annuity products. Not affiliated with, or endorsed by, the federal government or any government agency.
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