Expert's View

What role Social Security plays in your retirement depends on which retirement system you’re in.



If you are a FERS employees, Social Security is one of the three parts that make up your retirement package: a defined annuity benefit, the Thrift Savings Plan, and Social Security. As a result, a significant part of your retirement income will come from your Social Security benefit. So important is it that if you retire on an immediate annuity before reaching age 62, you will receive a special retirement supplement. The SRS will help you bridge the gap between the day you retire and when you become eligible for a Social Security benefit. The SRS approximates the amount of Social Security benefit you earned while covered by FERS.

To be eligible for the SRS, you must retire at your MRA with 30 years of service, age 60 with 20 years, or at your minimum retirement age (MRA) if you have taken early voluntary or involuntary retirement. Special category employees, such a law enforcement officers, firefighters and air traffic controllers, who retire will receive the SRS regardless of their age. Note: The SRS can be reduced or suspended if you exceed the annual Social Security earnings limit through wages or self employment.


For CSRS Offset employees, the picture is different. You are covered by both CSRS and Social Security. For most of you, 0.8 percent of your salary goes to the CSRS Retirement and Disability Fund and 6.2 percent goes to Social Security. Just as is true of all other employees covered by Social Security, when you reach the maximum Social Security taxable amount for a given year ($106,800 this year, same as last year), Social Security deductions stop. However, in your case, all your contributions – 7 percent – then go to the CSRS fund. Note: Special category employees covered by CSRS Offset contribute a higher percentage of their pay to the fund.

As a CSRS Offset employee, when you retire and reach age 62, your CSRS annuity will be offset by the amount of Social Security benefit for which you are eligible. Notice that I said "eligible." That reduction is automatic even if you don’t apply for a Social Security benefit. If you retire after reaching age 62, the offset occurs on the day you retire. The total amount you receive in benefits will be the same. It will just come from two different places, OPM and the Social Security Administration.

If you are a regular CSRS employee, you aren’t covered by Social Security. So, Social Security deductions won’t be taken from your salary. However, many of you have earned Social Security credits before you came to work for the government, while serving in the military, or from outside employment of one kind or another either during your CSRS career or afterward. The good news is that if you have earned at least 40 calendar quarters of coverage, you’ll be eligible for a Social Security benefit. The bad news is that both you and your CSRS Offset colleagues will be affected by the Windfall Elimination Provision. Just how much of a bite the WEP will take out of your Social Security benefit will be the subject of next week’s article.