What Counts Toward Your High-3 Salary Under FERS?

Federal employees throw around the term “High-3” so often that it starts to sound self-explanatory: take your three highest salaries, average them out, and you have your pension calculation.

Except that isn’t actually how OPM calculates it.

Your FERS High-3 is your highest average basic pay earned during any 36 consecutive months of creditable service. It is a time-weighted average, it does not have to line up with calendar years, and it includes specific forms of pay while strictly excluding others.

Getting this calculation wrong can ripple through your entire retirement plan—creating an estimate that looks great in Excel, but falls short when OPM sends your actual pension check.

Here is how the High-3 formula actually works, what counts, what doesn’t, and the most common traps to avoid.

Your High-3 Is Not Your Final Salary

If you retire on a Friday earning $108,000, your High-3 is not $108,000.

To get a $108,000 High-3, you would need to earn an average of $108,000 in qualifying basic pay across an entire 3-year consecutive window. If you received a promotion or step increase to $108,000 just 9 months before retiring, those higher paychecks will pull your average up—but the lower salary from the previous 27 months still drags the total down.

This is why recent promotions take time to fully “bake” into your pension. Every month you work at the higher pay rate gradually replaces a month at the lower rate inside your 36-month window.

How the High-3 Math Actually Works

The High-3 period is any 36 consecutive months of service that produce the highest average basic pay.

It does not have to start on January 1st. It could run from October 1, 2023, through September 30, 2026, or any other continuous 3-year block. For most feds with steadily rising pay, this will be the final 36 months of their career.

Here is a realistic example of how OPM weights a 36-month window:

• 3 Months at $98,000/year = $24,500

• 12 Months at $101,000/year = $101,000

• 12 Months at $104,000/year = $104,000

• 9 Months at $108,000/year = $81,000

The Calculation:

$310,500 (Total Earnings over 36 Months) ÷ 3 Years = $103,500 High-3 Average

Notice the gap: even though the final salary was $108,000, the official High-3 average used for the pension formula is $103,500.

What Counts (And What OPM Excludes)

One of the biggest sources of confusion is determining which numbers on your Leave and Earnings Statement (LES) actually belong in the calculation.

What Counts as “Basic Pay”

• GS Base Pay

• Locality Pay (This is included for standard GS employees—your retirement calculation does NOT ignore locality pay!)

• Special Rate Pay

• Law Enforcement Availability Pay (LEAP)

• Administratively Uncontrollable Overtime (AUO)

• Standby Duty Pay & Physician Market Pay

What Does NOT Count

• Regular Overtime Pay

• Performance Awards, Bonuses, & Incentive Cash

• Travel Pay & Per Diem

• Uniform Allowances & Lump-Sum Leave Payouts

If your total W-2 shows $125,000 because you worked heavy overtime and received a performance bonus, but your basic pay with locality was $105,000, only $105,000 goes into your High-3 calculation. Using your W-2 or gross paycheck amount as a shortcut will severely overstate your estimated pension.

Common High-3 Myths That Mess Up Retirement Estimates

• “Sick Leave Increases My High-3”

  • False. Unused sick leave adds to your Years of Creditable Service (time), not your High-3 (salary).

• “Military Buyback Increases My High-3”

  • False. Buying back military time adds to your total service years. Your High-3 is strictly based on your civilian federal basic pay.

• “I Can Pick My Top 3 Separate Years”

  • False. The 36 months must be consecutive. You cannot cherry-pick three non-consecutive high-earning years from different points in your career.

Should You Work Longer Just to Boost Your High-3?

A higher High-3 raises your pension check every month for life. But you shouldn’t let a spreadsheet convince you to trade away a year of your retirement freedom just to push a number slightly higher.

Suppose working one additional year raises your High-3 and adds another year of service, boosting your pension by $250 a month.

That is real money. But to get it, you give up 12 months of retirement freedom and work another 2,000 hours.

Always evaluate the tradeoff: a pension calculation is a tool to fund your life, not a game to get the highest score on paper.

The Bottom Line

Your FERS High-3 is the time-weighted average of your highest 36 consecutive months of qualifying basic pay. Locality pay counts, overtime does not, and recent promotions take time to reach their full impact.

Before you pick a retirement date, pull your actual salary history, run the weighted average, and base your plan on your true High-3—not your final salary or the gross pay on your LES.