Your federal retirement is built on three key components: your pension, Social Security, and Thrift Savings Plan (TSP). If you plan to retire before age 62, you might wonder about the Special Retirement Supplement (SRS) and how to ensure you receive it.
Understanding the Special Retirement Supplement (SRS)
The Special Retirement Supplement is designed to bridge the income gap for FERS retirees until they become eligible for Social Security at age 62. However, eligibility for the SRS depends on meeting specific criteria.
Eligibility Requirements for SRS
To be eligible for the Special Retirement Supplement, you must meet one of the following conditions:
- Reach your Minimum Retirement Age (MRA) with at least 30 years of federal service.
- Be at least 60 years old with at least 20 years of federal service.
Special provisions apply for certain groups, but here we focus on standard FERS retirees.
Clarifying the Rules
The critical factor here is understanding the Minimum Retirement Age (MRA). The MRA varies based on birth year but generally ranges between 55 and 57. If your MRA is 56 and 10 months, as it seems to be for Marty, you can retire with your full benefits, including the SRS, starting immediately upon retirement. Here’s how it works:
- If you reach your MRA (in Marty’s case, 56 and 10 months) and have 30 years of creditable service, you are eligible to retire and start receiving both your FERS pension and the SRS right away.
However, if your MRA is 57, you must wait until you reach that age to retire with full benefits. Retiring before your MRA means opting for a deferred retirement, which comes with significant drawbacks: loss of eligibility for the SRS, health benefits, and other federal retirement benefits.
Earnings Limitation
A critical aspect of the SRS is the earnings limitation. The SRS is subject to an earnings test similar to Social Security:
- For every $2 you earn above the annual limit, $1 is deducted from your SRS.
This earnings test only applies to earned income, such as wages from a job, and not to retirement income or TSP withdrawals. For example, if you work part-time or start a new job after retirement, the income you earn from these activities will be subject to the earnings test.
Practical Advice
- Verify Your MRA: Ensure you know your exact MRA. If you’re close to it, retiring just a few months early could mean missing out on significant benefits.
- Understand the Earnings Test: Plan your post-retirement income carefully to avoid reducing your SRS unexpectedly.
- Consult with HR: Your HR department can help verify your MRA and ensure you understand how to maximize your benefits.
Conclusion
To access your FERS supplement right after retirement, you must meet your MRA with the required years of service. For Marty, assuming his MRA is 56 and 10 months, he can retire and start receiving his SRS immediately. This supplement will continue until he turns 62, at which point he becomes eligible for Social Security.
If you have questions about your federal retirement benefits or need personalized advice, contact us at Plan Your Federal Retirement. Our experts are here to help you navigate the complexities of your benefits and ensure you make the most of your retirement.
Micah Shilanski 00:06
Your retirement is based on three things, your pension, social security, and your TSP. But if you’re going to retire before you’re 62, how do you make sure you get that special retirement supplement. Have you ever wondered something like that, then stay tuned for this FERS Federal Fact Check. Hi i’m Micah Shilanski with Plan Your Federal Retirement and welcome to this FERS Federal Fact Check. We have a question today that came in from Marty about something I enjoy talking about, yeah, not just taxes I know I do enjoy that one as well, but your special retirement supplement and making sure we understand these eligibility rules to make sure you get it. Marty writes in and says they had a question. They can retire in October 30 years under FERS. They’ll be 56 and about 10 months old, and they didn’t think they’d be eligible for the special retirement until they turned until the 27th which is when they were born. They filed for the retirement, and this counselor says that they were going to be eligible for the special retirement supplement due in October because they have 30 years of service, but he doesn’t think so, because he thought he had to wait until he’s 57. Have you come across this issue with your clients in the past? Marty, thank you so much for that question. So let’s talk about the rules, right? Because that’s really the important part about this, how do these FERS rules come together. Well, number one is, in order to retire with a special retirement supplement, the FERS supplement you got to meet one of two things. You got to be your MRA, Minimum Retirement Age and 30 years of Federal Service, or age 60 with at least 20 years of Federal Service. It got to be one of those two criteria. Now, if your special provisions, I do understand there’s separate criteria for you guys, it’s a little different, but I’m just talking about for the normal FERS retirees for right now. So Marty, the answer to your question is, it depends. What’s your MRA, what is your Mnimum Retirement Age? If your Minimum Retirement Age is 56 and a half, and you’re retiring at 56 and 10 months, then you are good to go. You can absolutely retire, because you got your 30 years of credible service retirement, and you’re going to get your pension and your supplement right away, we love it. But if your MRA is not, if your MRA is 57 then I would caution you not to retire until you’re 57 years young, because if you retire early before your MRA, it’s actually a deferred retirement, you don’t get your health benefits, you don’t get your supplement, you don’t get a lot of things. So you’re going to be really careful on this one. It sounds like, if I’m reading into the question here a bit Marty, that your MRA is probably that, excuse me, 56 at 10 months, so you could separate a 56 and 10 months assuming that your MRA, with 30 years of service, absolutely you’re eligible for your pension to start right away, and you’re eligible that supplement to start right away, up until you’re 62 years young, and at 62 it’s going to turn into a pumpkin, because you’re then eligible for your Social Security. Good note that, remember the special retirement that FERS supplement does have an earnings limitation, for every $2 you make above the special retirement supplement earnings limitation, they’re going to say $1 of that supplement away. So it changes every single year, so you have to look that up and make sure it’s the same as the Social Security earnings reduction. Now great news with that that’s not your retirement earnings, its own earned income, so if you go get a second job, always something I like my clients to be thinking about, because we don’t care about the gross, we care about the net, which shows up in your bank account. And if OPM comes back later and pulls that money back, well then that didn’t show up in your bank account for very long. So I hope this answers your questions. If you have questions like this, give us a call, we have a recording line now, so you can call in with your questions, we would hear from you where are you starting to get those I just love it, and until next time, Happy Planning.
