Is The Cost Of Working After Retirement Really Worth It?

Is there an earnings limit on my pension if I retire under FERS? I’ve been told that if I plan to retire after thirty years, and at my retirement age of fifty-five, and I keep earning money so as not to dip into my TSP early, this may not be a viable option. Is the earnings limit really under $16,000/year? If I go over that, must I repay $1 for every $2 I’ve gone over the limit?

This is not entirely accurate, but very close. When figuring out how you want to plan your retirement, you may want to clarify for your future’s sake. Let’s take a look:

Per the Office of Personnel Management (OPM) “Information for FERS Annuitants” booklet (Section 8, Employment in the Private Sector) your FERS pension will not be affected by your outside employment…

• Your FERS pension will not be reduced because of additional earnings after retirement. It is the “ “bridge payment” via Special Retirement Supplement (SRS) that could see the effects.

SRS or Special Retirement Supplement

• A FERS Employee who is receiving SRS benefits will find that those benefits are payable from the date of retirement until age sixty-two. It will be similar in amount to the Social Security benefits earned while employed as a FERS employee.

The SRS approximates Social Security benefits; therefore it will be subject to some of the same rules. Until you reach full retirement age, the Social Security Administration (SSA) caps the income. Depending on when you were born, that range is about sixty-five to sixty-seven years of age. In this case, the Social Security benefit is treated the same as the SRS, so it can be either eliminated or reduced if your earnings limit is exceeded.

The earnings limit before impacting either SSA or SRS payments is The limit for earnings before impacting either SSA or SRS payments is $17,040 as of 2018. The $2 to $1 scenario you brought up is correct. If the $17,040 limit is reached, the SRS benefit is shaved by $1 for every $2 earned (over $17,040) in 2018.

For Instance

In retirement, a FERS employee is receiving $1,000/mo from the SRS benefit. They choose to accept a job not within the federal government, earning $25,040/yearly. Because the amount exceeds the limit, they will be subject to an SRS benefit decrease of $4,000 for the year or $333/mo. ($25,040 – $17,040 = $8,000. $8,000 ÷2 = $4,000. $4,000 ÷12 = $333).

Which means that the original SRS payments of $1,000/mo will be fined in such a way that the real benefit would be approximately $667/mo ($1,000 – 333 = $667).