The FERS Supplement or the Special Retirement Supplement is a nice benefit to fill the gap between retirement and age 62 for retired federal employees under the Federal Employees Retirement System (FERS). Unfortunately, there is a ton of misinformation about how this benefit works and who gets it.
Here are some of the big misunderstandings that I have seen.
Misunderstanding #1: Everyone Gets It
Unfortunately, not everyone is eligible to receive the FERS supplement at retirement time.
The first big eligibility requirement is to be under age 62. If you retire after age 62 you are not eligible and for those that retire before 62 and are eligible, this supplement will pay up until age 62.
On top of the requirement to be younger than 62, you have to be a part of the following groups to receive the supplement right when they retire.
- Regular FERS federal employees who have reached their MRA (Minimum Retirement Age) with at least 30 years of service.
- Regular FERS federal employees who have reached age 60 with at least 20 years of service.
- Special Provision FERS federal employees who have reached age 50 with at least 20 years of service.
- Special Provision FERS federal employees who have at least 25 years of service.
The following groups may be eligible for the supplement but will have to wait until their MRA to start drawing it.
- Those who had to retire because those positions were discontinued.
- That who retired with an agency “Early Out”.
Here are two groups who are NOT eligible for the FERS Supplement.
- CSRS Employees
- FERS federal employees under Disability Retirement
- FERS federal employees who retire under MRA+10
Note: If you retire from federal service and take another job or start a business, your FERS Supplement may be reduced or eliminated if you have income over certain amounts! Typically, those earnings thresholds are very low!
Misunderstanding #2: You Have to Start Social Security Benefits at 62
Regardless of when/if you are eligible for this supplement, it will stop at age 62. At that point, some federal employees believe that you must start Social Security right away. This is not the case. You can choose to delay Social Security benefits as late as age 70, and in many cases, it can make sense to delay Social Security even if your TSP is depleted a little faster between the time that your FERS supplement ends and the age you start Social Security.
Misunderstanding #3: This Supplement Will Increase Like My Pension
One thing that makes your FERS Pension and Social Security benefits so valuable is that they increase over time. This increase is called cost of living adjustments. Basically, as the prices of things go up, so does your income. This is invaluable over a long retirement.
Unfortunately, your FERS Supplement does not enjoy cost of living adjustments. Once it is calculated by OPM at your retirement, it will not increase every year like your pension. It will stay the same.
The FERS Supplement, just like your other retirement benefits, can be a great tool in creating a dream retirement. The key is understanding the rules so that you don’t expect more than you are eligible for and so that you can get most out of them.