Once upon a time, the Congress created a very simply retirement system. It’s called the Civil Service Retirement System. However, because that system forced employees to either stay for a full career or lose most of their benefits, the Congress created a more complicated system and called it the Federal Employees Retirement System. While FERS is similar to private sector practices, it does create problems for FERS employees who are trying to figure out what they will get when they retire.
Unlike those covered by CSRS, FERS employees have to figure out their annuity, Social Security, and TSP. And, if they retire before becoming eligible for Social Security, they have to figure out what their special retirement supplement will be.
Let’s define terms. The special annuity supplement is a benefit that is paid to certain FERS employees who retire before age 62 and who are entitled to an immediate annuity. This supplement approximates the Social Security benefit earned while covered by FERS. It’s designed to bridge the gap between retirement and age 62, when a retiree first becomes eligible for Social Security.
Entitlement to immediate annuity is the key. You are eligible for an immediate annuity:
- at or after you reach your minimum retirement age (MRA with at least 30 years of service;
- at age 60 with at least 20 years of service;
- under one of the special provisions for law enforcement officers, firefighters, air traffic controllers, or military reserve technicians; and
- at of after your MRA under one of the early retirement provisions, whether the retirement is voluntary or involuntary.
Retirees who are not eligible for the SRS include the following:
- disability retirees;
- anyone retiring under the MRA+10 provision;
- anyone who is eligible only for a deferred annuity; and
- anyone retiring at age 62 or later.
The actual formula for figuring out the precise amount of your SRS requires data that you won’t have. And processing it is far too complicated anyway. Fortunately, there is a way to get a rough and ready estimate. Here it is:
- Take your annual estimated Social Security benefit at age 62. If you don’t have that information, you can get it by calling the Social Security Administration at 1-800-772-1213 or you can apply online by going to www.ssa.gov. Under Resources, click on Your Social Security Statement, then click on Need to Request a Statement?
- Divide Social Security benefit estimate by 40 and multiply the product by the number years you’ve been employed under FERS, rounded up to next full year. For example, if your estimated annual Social Security benefit at age 62 is $20,000 and you have 20 years of FERS service then your SRS will be $10,000 ($20,000 ÷ 40 x 20).
Just remember two things. First, this is only a rough estimate and is probably a little low. Second, the closer you are to retirement when you do the calculation, the more dependable it will be.
Note: The retiree SRS isn’t increased by cost-of-living adjustments (COLAs); it is for survivor annuitants. Also, for most retirees, if your earnings from wages or self-employment exceed the Social Security annual earnings limit, your supplement will be reduced or eliminated. This is not true for special category employees, such as law enforcement officers, firefighters, and air traffic controllers, who may earn as much as they want until they reach their minimum retirement age (MRA).