How Much Will My Pension Be Cut When I Apply for Social Security?

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By on August 5, 2014 in Q&A with 1 Comment

Q: I’m a retired CSRS federal employee who took an early out option in 1999. I was 48 with 30 years service (31 with sick leave added), which means they deducted 14% off for each year under 55. My question: Do you know how much my pension will be cut when I must apply for Social Security? I know there is a deduction (offset?). I’m 63 years old, so I have some time, but worry that I’ll end up with less money after I’m forced to apply. Could you help me or recommend someone who can?

A: They have reduced your pension by 14% total, not 14% per year.  The COLAs you have received for the years you have been retired have made up for some of that reduction.

I cannot tell from your question about pension reduction if you are:

  1. CSRS Offset.  That is, covered by both CSRS and Social Security.  I doubt if this is the case, or your pension would have been reduced already – when you turned 62; or
  2. Confused between offset and the Windfall Elimination Penalty.  If this is the case and you are affected by the WEP, your pension will not be reduced when you apply for SS.  The WEP changes the computation factor for your SS, generally resulting in it being cut in half.  On the Social Security website, enter  “WEP” in the search box and it will take you to publications that explain how the WEP reduces your Social Security.

In either event, you will receive more than you do now when you apply for Social Security.  If you attended a pre-retirement seminar before you retired (and still have the material after all those years), both CSRS Offset and the WEP should be described in the handouts you received.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.