Step increase, retirement and high-3

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Q. I am planning to retire the month after I receive a step increase. Will this increase be factored into my high-3 for retirement annuity purposes, or must I extend my retirement date to take advantage of this? If so, for how long?

A. Yes, it will be included. However, since you high-3 is made up of 78 biweekly pay periods, the impact it will have on your annuity depends on how long you are receiving it. If you only received the increase for one pay period, its effect on your annuity would be marginal at best.

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  1. To maximize the benefit of including the step increase, you’d have to stay in three years from the date you received it. Of course, by then, you might be eligible for another step increase.

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