Employees covered by CSRS Offset are in an oddball federal retirement system. Nothing ever seems easy for them because they are covered by both CSRS and Social Security. As a result, they’ll be eligible for benefits under both systems. In this article, I hope to untangle the mysteries of retirement benefits under CSRS Offset.
Let’s start at the beginning. If you’re a CSRS Offset employee, your annuity will first be calculated in exactly the same way as all other CSRS employees. Here’s the formula that will be used:
- Take: 1.5 percent x your high-3 average salary x your first five years of service.
- Add: 1.75 percent x your high-3 average salary x all service between 5 and 10 years.
- Add: 2 percent x your high-3 x all years and months of service over 10 years.
The end product is your estimated retirement annuity. The closer you are to retirement, the more accurate this estimate will be.
If you retire before age 62, that’s the annuity you’ll receive. However, when you become eligible for a Social Security benefit at age 62, the Office of Personnel Management will reduce, or “offset,” your CSRS benefit by an amount equivalent to the Social Security benefit you earned as a CSRS Offset employee. If you retire after age 62, the reduction in your CSRS annuity will be made when you retire.
While there are two ways the law prescribes for determining what the offset will be, one of them is only manageable if you work for OPM and have access to Social Security’s tape match. The other not only produces a good estimate, but it’s a method you can use yourself. Here it is: Multiply your monthly Social Security benefit estimate provided by the Social Security Administration by your total years of service under CSRS Offset (rounded up to the next higher year) and divide than by 40. If you like math, the formula looks like this:
Social Security Benefit X Total Years of Offset Service
If you retire from CSRS-Offset before you are 62, you should apply for Social Security a few months before you reach your 62nd birthday. That way SSA will have time to process your case and there will be no interruption in the amount of total benefits you receive.
Note: You will be entitled to any additional Social Security benefit you may have earned from other employment. All your Social Security-covered work history will be included when calculating that amount.