If you have stopped working before the minimum retirement age of 62, which is when you are allowed to start drawing from Social Security, there is a special FERS supplement that can help make up the difference.
There are a few provisions that need to be met before you can collect on this though. You must have worked 30 years before you reach the minimum retirement age, or hit 20 years of service at age 60.
But how is this supplement calculated? The standard formula looks like this:
Your Social Security Benefits x [25 Years of Service Under FERS / 40] = Your Special Retirement Supplement
You take what your Social Security benefits are going to be at age 62, and then you multiply that by the years you’ve put into working under FERS, then divide that number by forty. Keep in mind this is just a projection and does not take into account any cost of living adjustments you might get between now and then.
So let’s say you’ve worked in federal service for 30 years and now you’re retiring at the age of 56. Calculating your potential Social Security benefits, you see you’d collect $1200 per month. Plugging those numbers into the equation:
1200 x [30 / 40] = 750
That is, 750 dollars a month you are allowed to collect from FERS. This adds up to $9000 supplemental pay per year under FERS.
Unfortunately, there are a few other things that can get in the way of your collecting your Special Retirement Supplement, and one of them is the MRA +10 Provision. With MRA +10 Provision, you have to retire normally to collect any benefits.
Financial advisors should be available to help walk you through some of these complicated areas, especially with figuring out the right time to retire within the benefits you are eligible for.
And it should be noted that you don’t have to collect Social Security at age 62, and in fact, you can raise the amount you collect annually just by delaying your first withdrawal as long as possible.
With the Special Retirement Supplement, if you make more than a predetermined amount after you retire, it can reduce what you collect. With Social Security, you can simply collect once you passed the age limit. When it comes to your SRS, for every two dollars you make past the limit, you will have one dollar withheld from what you can collect. The limit you could make in 2019 was $17,640 before money starts being reduced. This only counts for reported earned money of course, as what you’d claim on your taxes, and things like annuities and other sort of benefit withdrawals won’t count against your earnings test.