Revisiting Your High-3 – What’s Included

11.1.24: Audio automatically transcribed by Sonix

11.1.24: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome back to the federal retirement Show. I'm your host, Val Majewski with American Benefits Exchange. As always, I appreciate you taking the time out of your schedule to view our content. That's what it is here for. It is for you, the federal employee who's looking for information regarding benefits and your retirement, and just making sure you're hearing what's going on, you're seeing what other people are doing. You're trying to make the right decisions as you go through your working career and into retirement. I want to share with you some of the experiences I've had recently, talking to folks like yourself and in different parts of the country and different scenarios. Now, just recently I was asked to do some some trainings. I was out in the field. I was, you know, helping some federal employees with some benefits and retirement briefings. And we get a lot of questions during those sessions, a lot of those questions. I always tell people, I say, look, I'm never going to claim to know everything, and I think that's valid. I mean, there's so much out there. It's like trying to say, if you're a CPA, that you know all the tax code. I mean, there's so many things within the tax code, some nuances and intricacies. You can't possibly be an expert in everything. So I always tell people, look, I know a whole lot through my experience, um, I've learned a whole lot. I've got the podcast, I've wrote a book on the subject, but there will be some questions that perhaps, I don't know, 100%, or I'm pretty sure I know the answer, but I don't want to give you inaccurate information.

Speaker1:
And and that occurred, um, recently and it just it caused me to, again, research and make sure that I was up to speed. And when I was talking to people, I was using the terms like, I'm pretty sure that's correct. But let me confirm for you because I want to absolutely make sure. And this revolved around going through, you know, the retirement calculation and explaining what to expect in retirement. And I had some folks that were classified a little differently than I don't want to say I've typically seen, but just they brought up something that I, again, was not 100% sure on, and I wanted to make sure I gave them the right answer. And I was discussing, how do you calculate your retirement pension and what is involved with that and may or may not know. And you can go through our previous episodes and view the content on when you're eligible to retire and what your retirement calculation looks like and how to walk through that. Pretty easy math. But this question when I talked about high three and what goes into your high three? What counts towards your high three, and what we look at when it comes to your high three. I was I was asked a question that again, sometimes I get stumped and there's a lot of information out there that I do not know and I will not claim to know, but I learned through this process and therefore you guys will learn through this process because I'm sharing this with you.

Speaker1:
So when it comes to your high three, if you're not familiar, that is the average of your highest three consecutive years of total base pay. Base pay plus locality. And what they do to use that number for your pension calculation is they're going to take the highest. It's not three calendar years but the highest consecutive 36 month period. So wherever that highest 36 month period is, they're going to take that amount to use towards your high three. Take the average of those three years. And as I mentioned, it does not have to be calendar years. I've had some federal employees come up to me and say, well, I got a pay raise in January and I'm going to retire in March. And since I haven't had that, that salary, that pay raise for the full calendar year, it won't count towards my high three. And I'd have to correct them and say that is incorrect. That is not true. You don't have to have a certain salary for a full calendar year. It's not just a January to January time period. It's a 36 month period. It could be a march to a march or a June to a June wherever your highest three year period is over the course of your career. Base pay plus locality. They're going to take the average of those three years, and that'll be used for your pension calculation.

Speaker1:
That's considered your high three. Well it's not just base pay plus locality that is added into your high three because there are some circumstances, there are some employees out there that get some special pay. And that is also included in the high three. And we've done episodes on high three before. But this was a section. This was an employee type, A label for folks that I just was not 100% familiar with. And I'm not afraid to admit that sometimes, you know, I get stumped and that I'm not always I'm not always correct either. There have been some questions along the years, over my 12 years of working with federal employees, where I've had to go back and say, you know what? I wasn't confident in what I told you, and I just want to make sure that I'm giving you the right information. And I would go back and make sure they knew. I corrected myself. I'd reach out on the phone, email, text, however I could get in touch with them and say, oh, by the way, you know Mr. or Mrs. Federal Employee. Um, I just want to correct what I said. I didn't feel right about what I said. I looked it up and I just want to make sure I was correct. Turns out I wasn't. And here's the accurate information. Here's the correction. And people appreciate that. But that's what you have to do also. I mean, I tell folks all the time when I'm giving these seminars and I'm giving these retirement trainings, you know, fact check me on this stuff.

Speaker1:
Because if I'm giving you incorrect information or if I misspoke or if I said something that didn't seem right, look it up. If you see something different, let me know. But in this situation, I was talking about high three. Somebody raised their hand. A couple people actually raised their hand and said, does it include this type of pay? And I said, look, I'm pretty sure, but I don't want to give you the wrong info. Let me, let me check because I know that for federal employees, there are certain types of pay that are not included in your high three, right? If you work overtime, typical overtime bonuses, those are not, you know, uh, included in your high three. The same with your annual leave hours. Those are not included or night differential pay for employees that's not included in their Sunday premium pay not included in there. So just there were certain things that I knew were not included in high three. But and there are others that I knew were right. And there are other things that I've talked about on this, on this show before that are included. So I wanted to make sure I gave this person the information. Well, they were they were discussing, um, a type of what turned out to be premium pay, but it was called, uh, title five. And they said for title five employees and does does their extra pay that they receive.

Speaker1:
Does that included in their high three. And looking into it, I said, well, if you're considered and I wasn't exactly sure, this is where again, I'm I'm walking you through my thought process as I'm giving a live presentation. But I just said, okay, it sounds like what you're telling me. And I was not 100% familiar with the classification of a title five employee, but, um, if it sounds like you're like a law enforcement officer or firefighter who gets, uh, let's say ortho or Leap Pay or some sort of bonus that is included in their high three, then I'm pretty sure that it is also. Yes, but let me check. And it turns out that the pay that they were talking about was premium pay. Their their premium pay, which essentially was a percentage more on top of their their total base salary for their standby, the standby nature of their job. And these folks were were EMTs. They worked for, you know, the fire department there on the particular, uh, federal installation that I was giving the trainings on. And turns out that yes, their premium pay the way that it was described is included in their high three. So I want to go through it again, because this was a learning experience for me where I was saying, what does I included in the high three? And just make sure that, you know, when you get to retirement that these certain things that that you have or these different ways that you get paid can be included in their high three.

Speaker1:
So the first thing obviously base pay plus locality, that is the main thing for the majority of you out there, federal employees, the the main sources of your high three are going to be base pay plus locality, because that's a question I get asked a lot too. Is locality included? Absolutely. Yes. That helps with your high three other types that could be included, right. Other ways or other other pays that could be included. I just mentioned this premium pay or this type of employee. So premium pay is included in the high three. The law enforcement pay the the A or the elite pay that they get. Yes. Um, I said different some different pays are not. But, uh, if you're like a special pay, you know, is included in there, uh, for, you know, recruitment, retention purposes that that is included in their environmental pay. Sometimes it was it was known as hazardous pay. Um, this is also included in the high three. If you're in that kind of position where you're getting that type of pay. So just just so you understand, you know, what is all included if you have a, a special job or a job that pays you slightly different than your regular federal employee, your regular GHS employee that you may have that included in your high three for retirement purposes. Now, it may probably also included in your calculation of your life insurance because it's based on your total base pay.

Speaker1:
So if you see that you may have some additional life insurance because your pay is a little higher in actuality than it shows on your leave and earnings statement. That can be a good thing too, but just understand if you've got the optional coverages like option B, which comes with a much higher cost over time, you may be paying more than you thought you were paying because that pay is also included in there, but you'd also have some more life insurance. So when it comes to retirement calculation and making sure you've got the right information and making sure that you know everything that you're doing to prepare. But as far as the numbers are concerned, we want to we want to know that you're using the right information and not shortchanging yourself because you're not including this extra pay that you're getting if you fall into these special provisions or these certain types of pay status, where you get extra pay that is included in your high three. So I'd encourage you, look, go back and view our previous content that talks about how we use the high three to calculate your pension. And the math equation that you can utilize. It is very simple math, but just to see what you're going to be using and what you're going to be utilizing after calculating that high three in order to get to your projected annual retirement annuity or your your pension amount. And then if you do have questions on top of it, if there's some sort of pay that I did not mention here, if there's some sort of pay that I did not include or talk about today, you want to know if that is included in your high three? Please reach out to us, go to our website.

Speaker1:
Federal retirement show.com. Fill out the form, request some information. Ask us some questions when we when we get in touch with you and say, look, I need more information on what's included in my high three on this type of employee. Is this type of pay that I receive included. And we can get to the bottom of it. Or if you have other questions, things that you have not seen us answer yet, by going through all the content. We have over 100 episodes for your viewing pleasure, and hopefully we've discussed the topics that you want to hear about, but if there is a topic that we have not spoken about yet, we haven't had a guest on about we haven't shared information on. Reach out to us and let us know. Also, we want to make sure we're giving you all the information you need as the purpose of this podcast. The purpose of all this content that we're providing is to give it to you so you can make the best decisions. The earlier you can learn all this stuff, the better. Why? Because then you know all the variables. You know all the things that you need to know to make the best decisions along your working career.

Speaker1:
You are planning for retirement, whether you know it or not. From day one of getting hired. If I guessed that I had on numerous episodes ago Brandi Pearson, she said that she works with federal employees day in and day out. You're planning on retiring from day one. It may seem like it's forever in the distance, but maximize that entire time. Take advantage of all the time that they give you so you can plan properly, and you need to know all the variables. So that's what this content is here for. Also, when I was there giving these, uh, retirement seminars, these briefings, I did talk to several people that were like, look, I enjoy listening to the show. We have. We appreciate it. I listened to it in the car. I binge listened to it. They got to catch up if I haven't in a while. And then also people that said they had purchased the book. One person said, I purchased your book, I like it. The reading is great. It reads very easily. It was great to hear. I love hearing that kind of feedback, both about the show and about the book. So I said the content is there. Go back and listen to it if you haven't already. And then as a reference piece, as a reference piece, that's why I wrote the book, so that you can go back to the book and look some things up, reread some things, get confirmation of some thoughts that you thought you had.

Speaker1:
If you didn't take notes, if you didn't write it down, that's what the book. There's no excuse is for there's no excuse for not knowing this information. There's no excuse for not being prepared for your retirement. There's no excuse for not taking advantage of everything the government gives you over the course of your working career. That's why I wrote the book. So to provide zero excuse to give you the playbook, to give you everything that you need to know in order to make the best decision. So go back again, look at the content, grab a copy of the book. If you have not done so already, reach out to us. We can. We can get a copy in your hands. And if you do have questions about your personal situation, that's also what the form is for on the website. Again, federal retirement Show.com, we're happy to talk to you about your personal situation. Go over your numbers, make sure that you're you're right on track for what you want to do when you get to that point about retirement, so you can retire when you want, how you want. Live the lifestyle that you do want when it's all said and done. So thank you for joining us today. Really, again, appreciate the feedback that I've been receiving. Really appreciate those that are reaching out to get that benefits and retirement review done. Be on the lookout for future content and look forward to seeing you on a future episode.

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