The minimum retirement age (MRA) for FERS employees is between the ages of 55 and 57, depending on the year in which you were born. Retirees born before 1948 have a MRA of 55, while those born in 1970 or later have a MRA of 57. However, regardless of the year in which you were born, your earliest age of eligibility for Social Security retirement benefits based on your own earnings is age 62.
Social Security is expected to be a part of the retirement package of FERS employees; in fact, FERS was created to bring federal employees under Social Security. Congress created something called the Retiree Annuity Supplement to tide over FERS retirees who chose to retire before they hit the age of eligibility for Social Security. This supplement goes by many names, but the most common is the Special Retirement Supplement (SRS) and that’s what we’ll call it for the rest of this article.
The SRS applies to retirees between their MRA and age 62, though there are some exceptions that we will look at later. It is designed to replace the portion of an age 62 Social Security benefit that is due to your work under the FERS system.
If you earned Social Security covered wages at another job prior to your federal service, that will not be replaced in the SRS. Therefore, it is likely that your SRS will not equal what your age 62 Social Security benefit would be. Let’s do a simplified example.
Your MRA is age 57 and you retire at that age with 30 years of federal service. Your age 62 Social Security benefit is expected to be $1000. In computing your SRS, your years of federal service are divided by 40 (the number of years that Social Security considers to be a full career), and the resulting fraction (3/4 or 75%) is multiplied by the age 62 Social Security benefit to give you the amount of your SRS. In this case, your SRS would be $750.
You would receive the SRS until you reached age 62. At that time the SRS would end, whether or not you chose to apply for your Social Security at that time. Your SRS ends when you become eligible for Social Security Retirement benfits – not when you apply for them.
But wait! The same earnings test that applies to Social Security benefits received before you reach your full Social Security retirement age will apply to your Special Retirement Supplement. For 2009, you may earn up to $14,160 before the earnings test kicks in. Once it kicks in, every $2 you earn above $14,160 will result in a $1 reduction in your SRS. The test applies only to earned income, not to pensions, dividends, etc.
But wait some more! The SRS does not receive a cost-of-living adjustment.
What exceptions are there to the SRS?
- Special category employees (law enforcement, firefighters, etc.) may receive the SRS at the time they retire, even if they are younger than their MRA. They are also not subject to the earnings test until they reach their MRA.
- Individuals who take voluntary early retirement are not entitled to the SRS until they reach their MRA.
- Employees who retire under MRA+10, deferred retirement or disability retirement are not eligible for the SRS
As this article illustrates, the federal retirement system is complex. Here is a piece of free advice that every federal employee should follow.
A federal employee who is planning to retire needs to get sound advice to make sure you understand the federal system that applies to you and how to work within that system to maximize your benefit. Don’t wait until you are about to walk out the door and into your brave new world of retirement to get advice. Start planning early in your career. Also, plan on taking retirement training, in addition to talking to your agency’s retirement counselor, to make sure you understand how the system works–before you are actually using it.