OPM sends retirement payments on a fixed schedule tied to your banking setup

The Office of Personnel Management (OPM) processes retirement payments for federal employees and retirees on the same day each month. Most retirees receive their payment on the first business day of the month, though the exact date depends on your bank and the payment method you chose when you enrolled. If the first falls on a weekend or federal holiday, OPM sends the payment the business day before.

Your payment arrives through direct deposit to the bank account you designated during your retirement application. OPM does not mail paper checks to most retirees anymore — direct deposit is the standard method. If you enrolled in direct deposit, you can expect the money to clear in your account within one to two business days after OPM releases it.

The amount you receive each month is calculated based on your years of service, your highest three years of average salary, and the retirement system you were under (FERS, CSRS, or another federal plan). OPM recalculates your payment once per year, usually in May, to account for cost-of-living adjustments (COLA). You will receive a notice before any change takes effect.

Key Takeaways

  • OPM retirement payments arrive on the first business day of each month through direct deposit to the bank account you provided during enrollment.
  • Your monthly payment amount is based on your years of service, highest three-year average salary, and your retirement system (FERS or CSRS).
  • OPM adjusts your payment once per year in May to reflect cost-of-living increases, and you receive written notice before the change.
  • If you need to change your bank account or payment method, contact OPM's Retirement Services office — changes typically take effect within one to two pay cycles.

What determines your monthly payment amount

Your OPM retirement payment is not a fixed dollar amount — it is calculated using a formula that depends on three main factors. The first is your years of creditable service, which counts the time you worked as a federal employee and paid into the retirement system. The second is your high-three average salary, which is the average of your highest three consecutive years of basic pay (not bonuses or overtime). The third is which retirement system you were enrolled in: FERS (Federal Employees Retirement System), CSRS (Civil Service Retirement System), or a smaller plan like FERS-RAD or FERS-FRAE.

FERS and CSRS use different formulas. Under FERS, your monthly payment is roughly 1% of your high-three average multiplied by your years of service, plus a separate annuity from your own contributions. Under CSRS, the formula is higher — roughly 1.5% to 2% depending on your years of service — because CSRS was a more generous plan that ended for new hires in 1984. Your retirement paperwork will state which system you were under.

OPM calculates your payment before you retire and includes the estimate in your retirement approval letter. You can request a detailed breakdown of how your payment was calculated by contacting OPM's Retirement Services office. The calculation is final once your retirement is approved, but your payment amount will change each May when OPM applies the annual COLA.

When payments arrive and what to do if one is late

OPM releases retirement payments on the first business day of each month. If you have direct deposit set up, the money typically appears in your bank account within one to two business days. If the first of the month falls on a Saturday, Sunday, or federal holiday, OPM releases the payment on the last business day before that date — so you may receive it on the 31st of the previous month or on a Thursday instead of Friday.

If your payment does not arrive by the third business day of the month, contact OPM's Retirement Services office immediately. Provide your name, date of birth, and the month the payment is missing. OPM will investigate whether the payment was sent and, if so, whether it was returned by your bank. Common reasons for delays include a closed or incorrect bank account, a name mismatch between your OPM records and your bank account, or a bank processing error.

If OPM confirms the payment was sent but your bank rejected it, you will need to update your bank account information with OPM before the next payment cycle. This usually takes effect within one to two months. In the meantime, OPM may issue a replacement check or reissue the payment to a corrected account, depending on the reason for the delay.

Updating your bank account or payment method

You can change your bank account information at any time through OPM's online portal, by phone, or by mail. The fastest method is OPM's website, where you can log into your account and update your direct deposit details yourself — the change typically takes effect within one to two pay cycles. If you prefer to call, OPM's Retirement Services office can process the change over the phone, though you may need to mail a signed form to confirm the change for security reasons.

If you want to switch from direct deposit to a paper check, you can request this change, but OPM discourages it and may charge a fee. Direct deposit is faster, safer, and reduces the risk of a lost or stolen check. If you have a valid reason for needing a check — such as no access to a bank account — OPM will work with you, but you should expect the process to take longer and may need to provide documentation.

If you are moving to a new bank or closing an old account, update OPM before you close the account. If OPM sends a payment to a closed account, the bank will return it, and you will have to wait for OPM to reissue it to your new account. This can delay your payment by several weeks.

Cost-of-living adjustments and annual payment changes

Once per year, usually in May, OPM increases retirement payments to account for inflation. This increase is called a cost-of-living adjustment (COLA) and is tied to the Consumer Price Index (CPI) published by the Bureau of Labor Statistics. The COLA percentage varies each year — some years it is 3%, other years it may be 0% or 8%, depending on inflation. OPM announces the COLA in early spring, and the increase takes effect with your May payment.

You do not have to do anything to receive the COLA — it is automatic. OPM will send you a notice in the mail before the increase takes effect, showing your old payment amount and your new payment amount. Keep this notice for your records, as you may need it for tax purposes or to verify your income to other agencies.

In rare cases, your payment may decrease rather than increase. This can happen if you have a change in your family status (such as a surviving spouse's benefit ending) or if OPM corrects an error in your original calculation. OPM will notify you in writing before any decrease takes effect and will explain the reason.

Taxes and reporting your OPM retirement income

OPM retirement payments are taxable income. The amount of federal income tax withheld from your payment depends on the tax withholding form you completed during your retirement application. Most retirees complete a W-4P form, which tells OPM how much tax to withhold each month. If you did not complete a W-4P, OPM withholds taxes as if you claimed zero dependents, which is usually more than you owe.

You can change your tax withholding at any time by submitting a new W-4P to OPM. If you want to reduce your withholding — for example, because you have other income sources or expect to owe less tax — you can do so, but you are responsible for making sure enough tax is withheld overall. If you under-withhold, you may owe money when you file your tax return.

Each January, OPM sends you a 1099-R form showing the total amount you received in the previous year and the amount of federal tax withheld. Use this form to file your federal income tax return. Some states also tax OPM retirement income, so check your state's rules or consult a tax professional if you are unsure.

What happens if you return to federal work after retirement

If you retire and then return to work as a federal employee, your OPM retirement payment may be reduced or suspended, depending on your age and how much you earn. Under FERS, if you are under age 62 and earn more than a certain amount (which changes each year), your retirement payment is reduced by $1 for every $2 you earn above that threshold. Once you reach age 62, the earnings limit no longer applies, and you receive your full retirement payment regardless of how much you earn.

Under CSRS, the rules are stricter. If you return to work as a federal employee before age 62, your retirement payment is suspended entirely. Once you reach age 62, you can work and receive your full retirement payment at the same time. These rules are complex, and the thresholds change annually, so contact OPM before accepting a new federal job to understand how it will affect your payment.

Frequently Asked Questions

What day of the month does OPM send retirement payments?

OPM sends payments on the first business day of each month. If the first falls on a weekend or federal holiday, the payment is sent on the last business day before that date. The money typically appears in your bank account within one to two business days after OPM releases it.

Can I receive my OPM retirement payment by check instead of direct deposit?

Direct deposit is the standard method, and OPM discourages checks. You can request a check if you have a valid reason, such as no bank account access, but the process takes longer and may involve fees. Contact OPM's Retirement Services office to discuss your options.

How do I know if my payment amount is correct?

Your retirement approval letter includes an estimate of your monthly payment and an explanation of how it was calculated. If you believe there is an error, contact OPM with your name, date of birth, and the reason you think the amount is wrong. OPM can provide a detailed breakdown of your calculation.

Will my OPM retirement payment increase every year?

Yes, OPM adjusts payments once per year in May to reflect cost-of-living increases. The percentage varies each year based on inflation. You will receive a notice before the change takes effect showing your new payment amount.

What happens to my OPM payment if I go back to work for the federal government?

Under FERS, your payment may be reduced if you earn above a certain threshold before age 62. Under CSRS, your payment is suspended until age 62. Contact OPM before accepting a new federal job to understand how it will affect your specific situation.