The Federal Employees Retirement System (FERS) Special Retirement Supplement is one of the most misunderstood benefit for FERS employees. Often, it is referred to as the Social Security Supplement or Special Retirement Supplement. One misconception I often hear is that the FERS SRS is related to Social Security. While the FERS SRS does utilize some information from Social Security, it is not provided by Social Security. It is a part of the FERS Pension.
The FERS pension’s “Three-legged Stool” is the FERS Pension, Social Security, and the TSP. However, many federal employees may be eligible for retirement before reaching Social Security eligibility age. The FERS Special Retirement Supplement aims to bridge the gap between retirement prior to social security eligibility.
What is the FERS Special Retirement Supplement?
The FERS Special Retirement Supplement is a temporary annuity payment provided to eligible FERS employees who retire before becoming eligible for Social Security benefits. It is designed to provide income between retirement and age 62. After 62, the retiree can choose to start social security or wait to collect social security. Regardless of the decision, the FERS Retirement Supplement will stop at age 62.
Eligibility Criteria
To be eligible for the FERS Special Retirement Supplement, federal employees must meet the following criteria:
- Retire with an Immediate Retirement, which means MRA with over 30 years of service or Age 60 with at least 20 years of service. (MRA+10 is not eligible)
- For Special Provision Employees (law enforcement officers, firefighters, or air traffic controllers), Any age with 25 years of service, or Age 50 with over 20 years of service.
- Early Retirement with VERA or VSIP (starting after you reach MRA)
Calculating the FERS Special Retirement Supplement
The FERS Special Retirement Supplement is calculated based on the employee’s years of FERS service and their estimated Social Security benefit at Age 62. The formula for calculating the FERS Special Retirement Supplement is as follows:
FERS Special Retirement Supplement = Social Security Estimate at Age 62 x (Years of FERS Service / 40
For example, If an employee with 30 years of service and their social security estimate is $2,000. We can calculate his FERS SRS below
$2,000 (Social Security at 62) x 30 (years of FERS service) / 40 = $1,500
Caution! Things to know about the FERS Special Supplement
While the FERS SRS does offer a bridge for income, we need to know several essential caveats. These rules may certainly affect your decision to retire, especially if you plan to work in the private sector after retirement.
- The supplement does not get COLA (Cost-of-Living Adjustments). Once it is established, it stays the same until age 62.
- The Special Supplement is subject to the Social Security Earning Test. If you decide to work after retirement, your work income may affect your FERS SRS amount.
*Only work income will affect the Special Supplement. Withdrawals from TSP or IRAs will not.
**The FERS Pension is not subject to the earnings test. You will always collect the FERS pension regardless of income.
Conclusion
The FERS Special Retirement Supplement is a valuable component of the retirement benefits package offered to federal employees under the Federal Employees Retirement System. By providing financial support to individuals who retire before they become eligible for Social Security benefits, the supplement offers a vital bridge to help federal workers transition into retirement with greater ease and financial stability.
Reach Out to Us!
If you have additional federal benefit questions, contact our team of CERTIFIED FINANCIAL PLANNER™ (CFP®) and Chartered Federal Employee Benefits Consultants (ChFEBC℠). At PlanWell, we focus on retirement planning for federal employees. Learn more about our process designed for the career federal employee.
Preparing for a federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars here! Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting here.
