[VIDEO] The FERS Special Retirement Supplement
As a Federal employee, whether you are CSRS or FERS, you already know that one huge benefit of working for the Federal government is that after meeting eligibility, you’ll receive a retirement pension. FERS employees who retire on an immediate, unreduced annuity before reaching age 62, are Also entitled to receive a FERS Special Retirement Supplement, or SRS. This is a payment you receive in addition to your Federal pension and was designed to help fill the gap between when you retire and age 62, which is when you can begin drawing Social Security benefits.
First, let’s talk about who is eligible. To be entitled to an immediate, unreduced annuity you must retire:
• at age 60 with 20 years of service,
• at your minimum retirement age (or MRA) with 30 years of service,
• at your MRA, if involuntarily retiring (for example due to a RIF)
• or at your MRA, if retiring under the Voluntary Early Retirement Authority, or VERA
A special note; Federal employees who retire under the MRA plus 10 provision, deferred retirees, and disability retirees, are typically not eligible for the SRS.
So, let’s talk about how an estimate of your SRS is calculated. First, you take your Social Security benefit estimate at age 62. Then you multiply it by your total years of FERS service rounded to the nearest whole number, and finally you divide that number by 40.
The SRS is a fixed amount that’s established on the day you retire. It is not increased by any cost-of-living adjustments, and it ends when you reach age 62 and become eligible for a Social Security benefit. And here’s the great part…the SRS does not affect your Social security benefits at all.
Many people don’t know this, but the SRS is paid by OPM, not Social Security, however, like Social Security, it’s subject to the annual earnings limit. That limit for 2019 is $17,640. That means, that if you retire from the Federal government and have wage earnings that exceed the exemption limit of $17,640, your SRS will be reduced by $1 for every $2 over that limit. This rule is the same for once you eventually start taking Social Security as well.
Another important note: If you are a special category employee, meaning you are a law enforcement officer, air traffic controller, or firefighter, and you retire before your minimum retirement age, different rules apply to you. You can actually earn any amount without your SRS being reduced. However, once you reach your MRA, you’ll be subject to the earnings limit just like all other FERS retirees.
So, as you can see, while the FERS SRS is a great benefit to those whom qualify, it can be a bit tricky to navigate what you can and can’t do. I recommend that you seek out a fed-focused financial professional to help educate you on your SRS, calculate it for you, and explain its impact on your retirement. If you need our help with this, please reach out anytime.
