For federal employees in Alaska planning to retire under the Federal Employees Retirement System (FERS) before age 62, the FERS Supplement can provide crucial income during the gap years before Social Security eligibility. At SBS Retirement Consultants, we help federal employees understand and maximize this important benefit.
What Is the FERS Supplement?
The FERS Supplement (sometimes called the Special Retirement Supplement or SRS) is designed for federal employees who retire before reaching Social Security eligibility age of 62. The supplement provides additional income to replace Social Security benefits that a retiree would have earned if they continued working until that age.
This supplement is available if you meet one of the following:
- Retire at your minimum retirement age (MRA) with 30 years of service
- Retire at age 60 with at least 20 years of service
- Retire under early retirement (VERA), if available
- You cannot be receiving disability retirement benefits
How the Supplement Is Calculated
The FERS Supplement calculation is based on the formula below, which estimates what your Social Security benefit would have been if you continued working until age 62:
- An estimate of your Social Security benefit at age 62
- Your years of FERS service compared to a full working career (defined as 40 years)
The formula is:
(Estimated Age-62 Social Security Benefit ÷ 40) × (Years of FERS Service)
For example, if your estimated Social Security benefit at 62 would be $2,000 per month, and you have 30 years of FERS service, your supplement would be approximately:
($2,000 ÷ 40) × 30 = $1,500 per month
The Earnings Test: A Critical Consideration
The FERS Supplement is subject to an earnings test similar to Social Security:
- For 2024, if you earned more than $22,320 (adjusts for inflation) in wages or
- self-employment income, your supplement is reduced by $1 for every $2 you earn above this limit.
- Some types of income (investments, pensions, IRA distributions, etc.) don’t count toward this limit.
- If you exceed the earnings limit significantly, your supplement could be eliminated entirely.
Strategic Planning for the Supplement
To maximize the benefit of your FERS Supplement:
- Timing your retirement: Consider how the supplement fits into your overall income plan.
- Planning post-retirement work: Understand how additional earnings might affect your supplement.
- Coordinating with other income sources: Align your TSP withdrawals, pensions, and other income with your supplement.
Remember that the supplement automatically ends when you turn 62, regardless of whether you choose to start Social Security benefits at that time.
At SBS Retirement Consultants, we help federal employees in Alaska create comprehensive retirement income strategies that make the most of the FERS Supplement while planning for the transition to Social Security.
Want to develop a strategic plan for your federal retirement? Contact us for personalized guidance on maximizing your benefits.
