Will You Receive An Additional Monthly Check If You Retire Before Age 62?
Special Benefit If You Retire Before Age 62
If you’re a FERS employee and you retire on an immediate, unreduced annuity before you turn age 62, you might be eligible for the FERS Special Retirement Supplement (SRS).
It’s an additional monthly paycheck, similar to your FERS pension.
You’ll receive it starting when you retire until the month you turn age 62.
Many FERS employees have never even heard of this benefit, so let us break it down for you…
Eligibility For The FERS Supplement
The FERS Supplement is eligible for any FERS employee who retires on a full, immediate retirement, and meets any of the following qualifications:
-Age 60 with 20 years of service
-Minimum Retirement Age with 30 years of service
-Minimum Retirement Age if retiring under VERA
You’ll notice we don’t mention anything about CSRS employees as there isn’t an equivalent in that system. There’s also no age 62 with 5 years of service qualification because the FERS Supplement stops paying the month you turn age 62.
A final note on eligibility: employees who retire under the MRA+10 provision, deferred retirees, and disability retirees are not eligible.
How Much Is The Supplement?
The actual calculation of the FERS Supplement is extremely complicated, so we’ll use a ballpark formula that will get us close to the actual amount. You can read more about the exact calculation here.
For planning purposes, we’ll use our estimate:
Years of Creditable Service divided by 40, times your Age 62 Social Security Benefit
You can find your Age 62 Social Security amount from page 2 of your estimated Social Security statement. If you don’t have one, they can be found on Social Security’s Website. You don’t have to start receiving Social Security benefits at 62 — this number is used only for calculation purposes.
FERS Supplement Reductions
If you’ll have earned income (salary, wages or income from self-employment) after Federal service, it’s possible your Supplement will be reduced. It depends on whether or not your earned income exceeds the “exempt” amount, which was $18,240 in 2020. This dollar amount is identical to the earnings test applied each year to Social Security recipients.
The Supplement will be reduced $1 for every $2 the recipients’ earned income exceeds the exempt amount ($18,240). It’s important to note that earned income does not include retirement income sources such as your FERS annuity, IRA withdrawals, TSP withdrawals, investment income, rental income, plus others.
Example of FERS Supplement Reduction
Michael retired in March of 2019 at his MRA of 56 with 30 years of service. He is due to receive a FERS Supplement amount of $12,000 per year or $1,000 per month. However, Michael got bored in retirement and began working part-time in May of 2019. Between May 2019 and December 2019, Michael earned $35,000 in wages from his part-time job.
Because Michael’s wages ($35,000) exceeded the exempt amount ($18,240) his FERS Supplement will be reduced in 2020 by OPM. The reduction will be [$35,000 – 18,640] / 2 = $8,380 Reduction.
In 2020, after OPM has computed his reduction, Michael will begin receiving his reduced FERS Supplement amount of [$12,000 – $8,680] = $3,320 per year or $277 per month.
Want to find out whether or not you’re eligible for this benefit?
Curious how much yours might be?
Please contact your friends at GPIS by calling 866-201-7829 or by sending an e-mail to firstname.lastname@example.org
You can also browse our other posts at www.gpis4u.org.
WANT MORE INFORMATION?
We are here to help. Our goal is to provide you with the knowledge and tools to make educated decisions when it comes to your benefits and retirement. Contact us today!