Will You Receive Extra Social Security Credit as a Federal Employee for Your Prior Military Service?
Were you in the military prior to 2002? Are you going to qualify for Social Security? If you answered “yes” to both questions, I have good news for you! You are going to receive extra earnings credits, which will result in a higher Social Security benefit. Here’s how it works:
The information below applies to active duty and active duty for training.
- For service 1957 through 1977, you will be credited with $300 in additional earnings for each calendar quarter in which you received active duty basic pay.
- For service 1978 through 2001, your earnings credits are based on your military pay. For each $300 in military pay you received, you will be credited with $100 in extra earnings, up to a maximum of $1,200 per year.
When are the extra credits applied?
For service from 1957 through 1967, the credits will be added when you apply for Social Security. Be sure to have your DD form 214 ready! For service after 1967, the credits were automatically added to your earnings record at the time you served.
Twelve hundred dollars per year may not sound like much, but remember this: Earnings are indexed to make them comparable to current dollars. For example, for a Social Security retirement starting in 2011, $1,200 in 1978 earnings will be multiplied by 3.85676, meaning your earnings record will have $4,628 added.
This information applies to both FERS and CSRS employees. However, for CSRS employees, there is a caveat.
If you start Social Security first, while still working, and then retire from your federal job and start receiving an annuity, you will be unpleasantly surprised. The Social Security Administration will calculate the reduction due to the Windfall Elimination Provision, and they will reduce your benefit accordingly. This cut can be as much as 55%, so be prepared!
(The author developed the software at www.fedbens.us, which includes calculation of the Windfall Elimination Provision.)