FERS consists of 3 different components: the FERS annuity (pension), Social Security, and the Thrift Savings Plan (TSP). The Special Retirement Supplement (SRS), AKA the FERS Supplement, was designed for federal employees who retire before they can start taking out from Social Security, which is age 62. It is an extra supplemental income to bridge the gap from retirement to age 62.
In order to be eligible for the Special Retirement Supplement, you have to retire under one of the following rules:
The eligibility is the same as qualifying for an immediate pension; therefore, an early retirement (retire at MRA or older with at least 10 years of creditable service) does NOT qualify for an SRS.
Your SRS is calculated for you by OPM. They use a formula involving your earnings history to calculate your benefit computation years, which they then use Social Security law to finally arrive at your SRS pension amount. A much simpler way of finding how much your SRS would be is by using the estimated SRS formula, shown below:
(Years of Creditable Service / 40) x Your Age 62 Social Security Benefit
Your SRS will almost always be lower than what your gross SS benefit will be, because the formula that OPM uses to calculate your SRS does not begin accruing until age 21 for Actual Pay.
If you qualify for the SRS, it will begin once you collect your first pension check after you retire. It will continue to be paid out to you until the month that you turn 62. You don’t actually have to take your Social Security at age 62 – you can delay it as late as 70 years old. But regardless of what age you take your Social Security, your SRS will end at age 62.
If you retire and decide to go back to work, your SRS can be reduced. The
Earnings Test says that if you make over a certain amount (which is $18,960 for 2021), then your SRS will be reduced by $1 for every $2 of income above the $18,960. If you earn more than $50,520 in 2021, then your SRS will be reduced by $1 for every $3 of income above this amount. Be sure to let OPM know if you do go back to work and make over the threshold of $18,960 so that they can adjust your SRA accordingly.
From what we’ve seen, OPM does a great job of calculating the SRS for you so you really don’t have to worry about it. There are no forms or applications you have to fill out, it will happen automatically.
Sources:
https://www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c051.pdf
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Get the most out of your federal retirement benefits by taking advantage of the FERS resources created by Micah Shilanski, CFP®, and the team of independent financial advisors at Shilanski & Associates, Inc. Join the thousands of federal employees who trust us to guide them in their retirement planning journey because of our unique perspective of how your FERS benefits contribute to your comprehensive financial plan.
Year after year I see Federal Employees missing the same critical concepts in their federal retirement planning. That’s why I’ve created an online workshop to help educate Federal Employees on these critical concepts.
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7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
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7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
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