QUESTION: How much will I collect each month on disability retirement?

ANSWER: The amount you collect each month depends on the federal government retirement system in which you are enrolled. FERS has a simple formula; CSRS requires some calculations.

FERS Employees: First, the good news. Apart from any potential cost of living increases, you will receive 60 percent of your "average pay" the first year you collect and 40 percent of your "average pay" during every other year you collect. "Average pay" is the average amount you earned each year during your three highest consecutive paid years of federal civilian employment.

Now the bad news: all FERS employees are required to apply for Social Security, even if they believe that they are ineligible. The majority of FERS employees who apply are not eligible for Social Security benefits, so their disability retirement annuities will not be affected.

FERS employees who are eligible for Social Security benefits will have their 60/40 percent of average pay annuities adjusted as follows: during the first year, for each dollar that Social Security gives you, FERS will deduct one dollar from your annuity. (This is known as a "wash," a transaction in which gains and losses are exactly equal.) During the second and all succeeding years, for each dollar Social Security gives you, FERS will deduct sixty cents from your annuity. In this case, there is some benefit from Social Security eligibility, but the value of that benefit is greatly diminished.

CSRS Employees: The good news is that you don't have to apply for Social Security. If you do apply and are eligible, your disability retirement annuity won't be reduced. Another bit of good news is that some CSRS employees will receive disability annuities higher then the 60 percent ceiling paid FERS employees. But there's bad news for CSRS employees, too. Although the law assures you a "guaranteed minimum" disability retirement annuity, that minimum can be far lower that the 40% floor paid to FERS employees.

A CSRS annuity is predicated on "average pay," (defined above) just as is a FERS annuity. CSRS employees with less than 22 years of actual service also need to consider an additional factor, known as "creditable service." You compute your "creditable service" by calculating the number of years until you reach age 60, and adding that number to your number of years of federal civil service.

Apart from adjustments in the annuity resulting from the potential application of COLA (cost of living adjustment) rules, CSRS employees can determine their approximate annuities by applying one of the following three rules:

1. If you have 22 or more years of "creditable service," but less than 22 years of actual service, you will collect 40 percent of "average pay" and you don't have to bother with any other calculations.
2. If you have 22 or more years of actual service, then don't worry about creditable service at all. Your annuity will be computed under the general formula for regular retirement and you will receive more than 40 percent of "average pay."
3. If you have less than 22 years of "creditable service," you will receive less than 40% of "average pay," and to find your approximate monthly disability retirement annuity, use the chart that follows.