The Federal Employees Retirement System (FERS) offers a Special Retirement Supplement (SRS), AKA the FERS Supplement, to help retirees before they can claim Social Security. However, there are rules about how much you can earn while receiving this supplement.
What is the Special Retirement Supplement?
The SRS is extra money for FERS retirees who stop working before they turn 62. It’s based on how much Social Security you might get and how long you worked under FERS. This extra money stops when you turn 62, even if you don’t start getting Social Security yet.
Earnings Limit Explained
There’s a limit to how much you can earn from working while getting the SRS. In 2025, you can earn up to $23,400 without it affecting your SRS. If you earn more than this, your SRS will be reduced.
How the Reduction Works
For every $2 you earn over $23,400, your SRS will be reduced by $1. This only applies to money you earn from working or from your own business. It doesn’t include money from your pension, savings, or investments.
Mid-Year Retirement and Earnings Limit
The earnings limit is adjusted if you retire in the middle of the year. For example, if you retire halfway through the year, your earnings limit would be half of $23,400, or $11,700.
Example of SRS Reduction
Let’s say you retire in June and earn $30,000 after retiring. Your earnings limit would be $11,700 (half of $23,400). You earned $18,300 over the limit. Your SRS would be reduced by $9,150 ($1 for every $2 over the limit).
Important Things to Remember
- Only money you earn from working counts towards the limit. Income from your pension, dividends, interest, capital gains, and rental income are examples of unearned income, and don’t count towards the earnings test.
- Money you earned before retiring doesn’t count, even if you get paid after retiring.
- When you turn 62, the SRS stops, and these rules no longer apply.
Getting Help
If you’re not sure how these rules might affect you, it’s a good idea to talk to someone who knows about retirement planning. They can help you figure out how much you might earn and how to avoid problems with your SRS.
ABOUT THE AUTHOR
Micah Shilanski, CFP®, is a distinguished financial planner known for his deep commitment to providing exceptional advisory services to his clients. As the founder of Plan Your Federal Retirement, Micah has dedicated his career to helping federal employees understand and optimize their benefits to ensure a secure and prosperous retirement. His expertise is widely recognized in the industry, making him a sought-after speaker and educator on financial planning and retirement strategies.
Micah’s approach is client-centered, focusing on creating personalized strategies that address each individual’s unique needs. His work emphasizes the importance of comprehensive planning, incorporating aspects of tax strategy, investment management, and risk assessment to guide clients toward achieving their financial goals.Micah Shilanski 00:04
You’ve retired, you’re getting that pension check coming in, and then one day you get a letter from OPM that says, Oops, you are paid a little too much, and they want their money back. If you want to know how to avoid this, then stay tuned for this FERS Federal Fact Check. Hi, I’m Micah Shilanski with Plan Your Federal Retirement, and we have a good question that came in today, there’s so many great questions that come in, but we’re talking about Chris’s question today, how about that special retirement supplement, that FERS supplement in the earnings limit that it has, let’s find out what Chris’s question is. If you have a birth month of January or April, and the year you obtain 60 age 61 you exceed the earnings limit, how is the overage paid since you will have obtained 62 by the reporting time of the special retirement supplement has ended. Thanks for the great podcast, and I’m claiming 1 million Federal Employees reached right along with you. Well, thanks, Chris. I appreciate that. We love doing the podcast, as you know, so smash that like button, send this out, we want to help another 1 million Federal Employees with their retirement, we can only do it with your help and your great questions. All right, Chris, so the answer your question is, it’s pro rata, that’s the way that this is going to work, right? Same as if you were to retired mid year, if I retired mid year, and I know the earning limitation changes for my simple math, we’re going to call $20,000 is our earnings limit, yes I know it’s not exactly that, but it’s going to make my math super easy, and what the earnings limitation says if you retire to get your full pension coming in, which is great, in addition to your pension, if you’re eligible for that special retirement supplement, that FERS supplement, it’s tied to Social Security, and if you claim Social Security early a 62 to your FRA your full retirement age, it has an earnings limit right along with it, which is around $20,000 and what that says is, for every $2 you make, about 20 grand, they’re gonna take $1 of your Social Security away, Micah, this isn’t Social Security, it’s a special retirement supplement, I know, but since it’s tied to Social Security, it’s calculated the same way, with the same earnings limitation, so you get your pension, which doesn’t count include as earnings, what is earnings? Go get a job, you work, self employed, it’s not rental property, it’s not your permanent fund dividend, you live in Alaska, it’s not your TSP withdrawal, it’s not rental income, it’s earned income if you go get a job after retire, so if you go get a job and you’re making $30,000 a year, and their earnings limitation is $20,000 a year, then you have $10,000 of excess earnings, they’re going to take two of every $1 above and so half that’s a $5,000 reduction in special retirement supplement, of course, that’s an easy example, because we’re going to give it for an entire year, but what happens when your birthday is mid year, or you retire mid year, and then answer we’re going to go back to is pro rata. So in our example, I’m going to make to a simple example, then we can go to yours, let’s say if you retire, or your birthday is going to be in June, what’s going to happen? So if you retire in June, or if your birthday is and this is the last day of the month, then what happens is your earnings limitation, instead of being 20,000, can’t do my fingers right, instead of being $20,000 because six months has passed, now your earnings limitation is $10,000 and they’re only going to include earnings that you’ve earned after that date of retirement, right? So now if you get your last paycheck, by the way, two weeks after you retired, that doesn’t count in your earnings limitation, because the money was earned in that previous cycle, you’re just now getting paid for it, it doesn’t count against you, but if you go get another job, it would, and Chris that going to bring us to your point of the pro rata side about how does it shut off, it’s going to shut off that same way, so even though your birth date is going to be, let’s say that January through April, and the reporter period is afterwards, you’re still subject to it in that period in time. So I like to disclose what your income is going to be, most of my clients don’t like that love letter from OPM that says, Oops, you’ve made too much money now give us it back, so I like to be a little bit closer to that, especially for tax reasons. So Chris, I hope this answers your question, if you need help with more of a detailed example of saying, hey, this is my exact numbers, this is how we need to break it down, etc, then give us a call, reach out on our website, fill out the form, sit down with one of our financial advisors, and let’s see if we can answer your questions directly for you. Until next time Happy Planning!