Take Discontinued Service over Disability Retirement?

Let’s take these two different retirements one at a time. And I am making an assumption that you are not currently your Minimum Retirement Age (MRA). With a Discontinued Service Retirement (DSR) you are eligible to draw your FERS immediately however you are not eligible to draw your Retiree Annuity Supplement (RAS) until you have reached your MRA. The RAS only is earnings tested, meaning if you work & make more than the earnings test limit ($16,920 for 2017), you could reduce/lose your RAS, but not your FERS. When you turn age 62, the RAS goes away because you are now eligible to draw your earned Social Security benefit even if you elect to wait to draw it at a later age. With Disability retirement, the computation is 60% of your high-3 for year 1 minus 100% of any Social Security you are eligible to receive & after year one it drops to 40% of your high-3 minus 60% of any Social Security you are eligible to receive. In the meantime, both have earnings tests in the event you find outside employment. Depending on the medical documentation used for the disability retirement, you may be required to have annual physicals to prove you continue to be disabled. IF you are found medically recovered or restored to earnings capacity, your disability payments will stop. Having said that, your DSR with the RAS might be more than the disability retirement so you have to calculate how much you are earning before age 62 and is it actually worth it to take the lower amount now knowing it will be higher later..but how long will you have to live for it to be worth it? And, without knowing the extent of your disability, it could stop if you become recovered or restored to earnings capacity. And my final thought, when you are calculating your age 62 benefit, to be fair in your assessment, be sure to include your Social Security Benefit in addition to either annuity as it is part of your retirement package. I hope this helps in making your decision.

Well that does change some of my response because retiring under the special provisions as a Military Reserve Technician separated for disability or any other reason who is at least age 50 with 25 years of service is eligible for the RAS immediately and the earnings test doesn’t begin until your MRA. When doing your math, did you take into account that your age 62 Social Security benefit should be higher than your RAS? If yes, then it appears you have the money portion figured out if you know it will take you about 4 years or until age 66 to have the disability overtake the DSR. Your decision will be based on whether you can live on what the disability would pay you now versus remaining on the DSR.