Average Final Compensation is the average of your salary during your four highest-paid years (48 consecutive months) in a row. If your four highest-paid years in a row include a final payment for unused vacation leave and/or prorated longevity, your average final compensation may be increased by the extra payment(s). Final payments, if any, for unused sick leave or reimbursements for expenses, are not includable in your average final compensation.
Creditable Service is the total of all service credit that counts toward retirement. It includes membership service for any period you contribute to TSERS, provided you have not withdrawn your contributions. It also includes credit for eligible purchased service and eligible unused sick leave that is converted to creditable service at retirement.
Service Retirement Calculation Example
Assume employee Mary Benson retires at age 60 with 32 years and six months of creditable service and an average final compensation of $40,954. Because Mary has more than 30 years of creditable service at retirement, she receives her basic benefit of about $24,000 a year (about $2,000 monthly) for the rest of her life under the maximum allowance. Monthly payments would stop at her death.
The following table shows how we calculate Mary’s benefit. Use the spaces in the right-hand column to fill in your figures for an estimate of benefit.
| Step 1 | Example | ||
| Add your salary during your 4 highest-paid years (48 months in a row) | Year 1 | $____________ | $39,988 |
| Year 2 | $____________ | $40,484 | |
| Year 3 | $____________ | $41,350 | |
| Year 4 | $____________ | $41,994 | |
| Total | $____________ | $163,816 | |
| Then, divide the total by 4 to get your average final compensation (AFC) | divide by 4 | /4 | |
| Average Final Compensation | $____________ | $40,954 | |
| Step 2 | |||
| Step 1 AFC | $____________ | $40,954 | |
| Multiply Step 1 AFC by 1.82% (.0182) to apply the retirement formula* | x .0182 | ||
| Total | $____________ | $745.36 | |
| Step 3 | |||
| Determine your creditable service | ____________ | 32.5 years | |
| Step 4 | |||
| Calculate your annual benefit* by multiplying Step 2 by Step 3 | Step 2 Total | $____________ | $745.36 |
| Step 3 Years | x ___________ | 32.5 years | |
| Total Annual Benefit | $____________ | $24,224.20 | |
| Step 5 | |||
| Calculate your monthly benefit* by dividing Step 4 by 12 | Step 4 Total Annual Benefit | $____________ | $24,224.20 |
| divide by 12 | /12 | ||
| Total Monthly Benefit | $____________ | $2,018.68 | |
| (This is an estimate of the payment you will receive each month before taxes or any other deductions.) | |||
*Remember, if you retire early or if you choose for payments to continue to a beneficiary after your death, these numbers will change.
Download a Benefit Calculation Worksheet
Log in to your ORBIT account to Create a Custom Benefit Estimate.
Your age at retirement is an important factor in determining your monthly benefit. If you do not meet the requirements for a full-service retirement, you may still retire early, but you will receive a reduced monthly benefit for your lifetime. If you are younger than age 55, with less than 30 years of creditable service, your early service retirement benefit will be reduced by the percentages shown below. If you are between birthdays when payments start, the reduction will be adjusted proportionately.
| AGE | Years of Creditable Service | |||||
| 29 | 28 | 27 | 26 | 25 | 15 | |
| 54 | 96% | 96% | 96% | 96% | 96% | 96% |
| 53 | 95% | 92% | 92% | 92% | 92% | 92% |
| 52 | 95% | 90% | 88% | 88% | 88% | 88% |
| 51 | 95% | 90% | 85% | 84% | 84% | 84% |
| 50 | 95% | 90% | 85% | 80% | 80% | 80% |
| 49 | 91% | 86% | 81% | 76% | 76% | N/A |
| 48 | 87% | 82% | 77% | 72% | 72% | N/A |
| 47 | 83% | 78% | 73% | 68% | 68% | N/A |
| 46 | 79% | 74% | 69% | 64% | 64% | N/A |
| 45 | 75% | 70% | 65% | 60% | 60% | N/A |
| 44 | 71% | 66% | 61% | 57% | 56% | N/A |
| 43 | 67% | 62% | 57% | 52% | 52% | N/A |
The chart above uses whole numbers for years of service and age as a reference. When you retire, your creditable service will be adjusted based on age and service in years and months
Assume employee Fred Wise retires at age 51 with 24 years and three months of creditable service and an average final compensation of $40,954.
| Here is how we calculate this benefit |
| (AFC) $40,954.00 |
| x 0.0182 |
| $745.36 |
| (creditable service) x 24.25 |
| $18,075.05 |
| Now, apply the early retirement reduction percentage |
| $18,075.05 |
| (percentage at age 51) x 0.84 |
| $15,183.04 |
The following chart shows the approximate monthly benefit paid under the maximum allowance option at various salary levels, depending on age and creditable service. These are only examples. Your own benefit is calculated individually and depends on your age, creditable service and average final compensation.
| Monthly Retirement Benefit Under Maximum Allowance | ||||
| Age ➡️ | 45 | 50 | 55 | |
| AFC ⬇️ | Years of Service ➡️ | 25 | 28 | 30 |
| $90,000 | $2,048 | $3,440 | $4,095 | |
| $80,000 | $1,820 | $3,058 | $3,640 | |
| $70,000 | $1,592 | $2,675 | $3,185 | |
| $60,000 | $1,365 | $2,293 | $2,730 | |
| $55,000 | $1,251 | $2,102 | $2,503 | |
| $50,000 | $1,138 | $1,911 | $2,275 | |
| $45,000 | $1,024 | $ 1,719 | $2,048 | |
| $40,000 | $910 | $1,528 | $1,820 | |
| $35,000 | $796 | $1,337 | $1,593 | |
| $30,000 | $683 | $1,146 | $1,365 | |
This page was last modified on 09/10/2024