When you retire as a federal employee, you might get money from three main sources: your pension (FERS), Social Security, and your Thrift Savings Plan (TSP). But what happens if you work after you retire? This article explains how earning money can affect your benefits.
The FERS Supplement
The FERS Supplement is extra money some federal retirees get if they retire early. It helps replace some of the Social Security money you would have earned if you worked longer. But there are rules about this supplement if you work after retiring.
Social Security and Earnings Limits
Before you reach age 62, there’s a limit on how much you can earn. In 2024, if you earn more than $22,320 a year, your Social Security benefits might be reduced. For every $2 you earn over this limit, $1 is taken from your benefits.
What Counts as Earnings?
Not all money you get counts toward this limit. These don’t count:
- Your FERS pension
- Money from your TSP
- Money from renting property
But money from working, whether part-time, full-time, or self-employment, does count.
What Happens If You Earn Too Much?
If you earn more than the limit, both your FERS Supplement and Social Security can be reduced. For example, if you earn $40,000 in a year, about $8,840 could be taken from your FERS Supplement.
Should You Start Social Security Early?
If you start getting Social Security before your full retirement age:
- Your benefits are reduced by about 25%
- You might get less money if you earn too much
For many people, it might be better to wait to start Social Security.
Key Points to Remember
- The FERS Supplement and Social Security can be reduced if you earn too much
- In 2024, the earnings limit is $22,320
- Money from your TSP or renting property doesn’t affect your FERS Supplement
- It’s important to think carefully about when to start your benefits and how much you plan to work
For more information, visit the OPM website or the Social Security Administration website.
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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.