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Could Taking Early FERS Retirement Cost Benefits?

Although taking retirement early may sound appealing to many people, doing so could end up being detrimental to your retirement income situation – especially in terms of your FERS (Federal Employees Retirement System) Special Retirement Supplement (SRS) benefit.

The SRS was implemented to help in bridging the gap between the time that a FERS employee retired and the time that he or she was able to draw on Social Security income at age 62. This benefit will end when you turn age 62 and become eligible for Social Security.

The amount of the benefit is calculated based upon the age that you are when you take your retirement, as well as the number of years you have in agency service. With that in mind, taking an early retirement could essentially cost you in the dollar amount of benefit that you receive.

Determining the Amount of Your Monthly Special Retirement Supplement Benefit

Looking at an example, if your minimum retirement age was 57, and you retire with 30 years of federal service, your Social Security benefit may be $1,000 per month. In determining your SRS benefit, the 30 years of your federal service would be divided by 40 (the number of years in which Social Security considers to be a “full” career).

That figure, 75%, is then multiplied by the dollar amount of the age 62 Social Security benefit. This will result in the amount of your SRS benefit. In this particular case, the amount of your monthly benefit would be $750 per month.

However, if you had retired early with only 20 years of service, the calculation would come out differently. For example, 20 years divided into 40 would come out to a 50% fraction. This multiplied by the $1,000 Social Security benefit at age 62 would instead leave you with $500 per month in SRS benefits – a substantial difference from the $750 you would have with 30 years of service.

In either case, your SRS benefits would end when you reached age 62 and you were eligible for Social Security retirement benefits. However, these benefits can end even sooner if you have earnings from wages or self-employment that exceed the Social Security earnings limit. So, if you do plan to have even a part-time job in retirement or to start your own new business endeavor, this is also something to be mindful of.

About June Kirby

June Kirby has almost two decades of experience serving as a federal employee retirement trainer, strategy specialist, and advocate. Based on her extensive knowledge, she offers consultation on a host of federal retirement benefits and TSP maximization strategies. Ms. Kirby tirelessly travels the country to make herself available to hundreds of deserving, yet under-served federal and postal employees, federal agencies, unions, and organizations.

Simply Secure Financial and June Kirby are not affiliated with or endorsed by the U.S. Government, any governmental agency, or any federal benefits programs discussed herein. Your personal specialist at Simply Secure Financial may offer insurance services, and as such, is a licensed insurance professional with training and experience in federal employee benefits.

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