Earning Extra Income During Retirement for Federal Government Employees

By on March 9, 2014 in Current Events, Retirement with 64 Comments

If you are a federal government employee, you have the security of knowing that during retirement, there will be a pension to fall back on. Unfortunately, in the current economy, the retirement benefits provided by the federal government simply aren’t enough to support all retirees.

Many retired federal government employees must find alternative ways to supplement their income in order to maintain their current standard of living through retirement. Fortunately, there are many ways that retired adults are earning extra income, from tutoring and babysitting to turning their hobbies into cash. Read on to learn more about why you may need to consider extra income during retirement and what options are available.

Understanding Your Retirement Benefits

The first step in planning for retirement finances is understanding retirement benefits as a federal government employee. Employees of the federal government are entitled to the Federal Employees Retirement System, or FERS. FERS is comprised of three parts:

  • Social Security Benefits: Federal government employees receive Social Security, the federal insurance program that offers not only retirement benefits, but also disability and unemployment to citizens of the U.S. Social Security transfers with you between employers and includes Medicare benefits.
  • Basic Benefit Plan: The Basic Benefit Plan is also referred to as an annuity. This benefit plan is a fixed amount that is determined by two factors: years of creditable service and the average rate paid annually during your three highest paid consecutive years of work. After you retire, the annuity is then paid in monthly installments.
  • Thrift Savings Plan: The Thrift Savings Plan (TSP) is the component of FERS that employees can choose to pay into themselves. Your agency will automatically deposit the equivalent of 1% of your basic pay into your TSP account during each pay period. If you make contributions in addition to this sum, your agency of employment will match them. These contributions are tax-deferred.

In addition to these three components, the benefits that you receive during retirement are also determined by your eligibility. Eligibility for FERS is based on both the age at which you retire and the number of years of creditable service completed in your position. Many federal government employees are required to reach a Minimum Retirement Age, or MRA, before they become eligible to receive retirement benefits.

Finally, some federal government employees are eligible to obtain the FERS Supplement. This supplement is a temporary source of income for federal government employees who retire before they turn 62, which is the age of eligibility to begin receiving Social Security benefits. If you are entitled to this supplement, it will be automatically included with your FERS benefits.

Working While in Retirement

In this economy, working while in retirement is a necessity for many federal government employees despite the benefits received under FERS. However, one important question to ask is whether or not working during retirement affects your retirement benefits. Working during retirement does affect your Social Security benefits, and this effect is based on age.

If you have not yet reached the full age of retirement, have retired, and are working part time, you will have $1 deducted from your Social Security benefits for every $2 earned over the annual limit on earnings, which is $14,640. This deduction will change to $1 for every $3 with a limit of $38,880 during the year before you have reached the full age for retirement. Finally, when you reach the full age of retirement, there are no limitations on how much you can work and what benefits you will receive.

15 Ways to Extra Income During Retirement

Fortunately for retired federal government employees, there are many options available for earning extra income. Just create a basic website, advertise on craigslist, and you’ll be ready to start making extra money. Here are 15 ways to earn extra income during retirement.

1.      Tutoring: You don’t have to be a retired teacher to have the skills it takes to tutor students. Parents of children at all grade levels are seeking tutors in a variety of subject areas. Tutoring is a great option for retired government employees who are skilled in math, reading comprehension, the sciences, etc.

 2.      Temping: Signing up with a temp agency is a good way to find work when you need it without spending your entire retirement employed. Many employers are seeking temporary workers due to budget cuts, making this a good option for retirees.

 3.      Writing: Have you developed writing skills (resume writing perhaps) during your years as a federal government employee? If so, you can seek out freelance writing and editing jobs. This will allow you to work from home and choose your own hours.

 4.      Selling Crafts: Do you love to knit, quilt, make jewelry, or create other handmade items? Handmade goods are being sold online by millions of people on websites such as Etsy. Turn your skills into cash by setting up an online store.

 5.      Antiquing: If shopping for antiques is one of your hobbies, why not turn it into cash? You can scour antique shops, estate sales, and garage sales for the best finds, then resell them on eBay or Craigslist to turn a profit.

 6.      Pet Care: For those who love animals, providing pet care is another good way to earn a little extra income. Dog walking is particularly lucrative, with many dog walkers charging $15-$25 per hour, per dog. It’s also an excellent way to keep up with exercise.

 7.      Childcare: If your kids are all grown up, why not help other families with theirs? Working parents will be glad to leave their children with a babysitter they can place their trust in, and spending time with children will be a rewarding experience.

 8.      Elder Care: On the opposite end of the spectrum, many younger retirees can offer elder care to their older peers. This includes a range of nonmedical tasks such as housekeeping, running errands, and food preparation.

 9.      Renting: If you would prefer not to find another job during retirement, consider renting out an extra space in your home, such as a basement apartment or guesthouse. If you have a vacation home, rent that space when not using it. Sites like AirBnB make the process simple.

 10.  Bed & Breakfast: If you have a lot of extra space, you can do more than just rent it – why not try opening a bed & breakfast? This is one of the least expensive ways to start a business, and if you live in a prime vacation area, it can generate a lot of income.

 11.  Selling Old Items: As we age, we somehow manage to collect basements and attics full of items we don’t really need. Consider selling some of these items at a garage sale or online to generate additional money.

 12.  Gardening: Is gardening how you love to spend your day? Consider selling flowers, fruits, and vegetables at a local farmer’s market.

13.  Handyman: If you are skilled in home repairs, you have a viable way to earn extra income. Advertise yourself as the local Mr. or Mrs. Fix It and take on smaller projects to generate the extra income you need.

 14.  Investing: Many retirees focus on their investments to supplement their retirement income. Invest in the services of a skilled broker to ensure that you are making the most out of your investment portfolio.

15.  Tax Preparation: When tax season rolls around, everyone is searching for an affordable way to get help with their taxes. If you’re skilled in this department, simply register with the IRS, pay a nominal fee of $64.25 a year for your Preparer Tax Identification Number (PTIN), and you’re all set.

© 2016 Jason Kay. All rights reserved. This article may not be reproduced without express written consent from Jason Kay.

About the Author

Jason Kay is a professional resume writer and regular contributor to KSADoctor.com, a professional federal resume service and repository of sample KSA statements.

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