If you are a FERS Special Provision employee, FERS rules are slightly different for you. This is only fair since a mandatory retirement age runs counter to a pension system with age-based and length-of-service based components. The FERS supplement for special provisions, in particular, offers benefits that work well with the requirement that you retire in your mid to late 50s.
The supplement is meant to serve as a stand-in for Social Security until you reach age 62. This is the earliest age at which you can draw Social Security based on your own earnings history, and once you turn 62, the supplement stops. Lastly, you can’t draw the supplement unless you’re eligible for immediate retirement. Fortunately, as a special provision employee, you can reach this age sooner than non-special provision employees.
As a special provision employee, you are eligible for a normal, immediate retirement at:
- Any age: if you have 25 years of creditable service as a Special Provisions employee, you can apply for an immediate retirement at any age.
- Age 50: with 20 years of creditable service under Special Provisions, you can apply for an immediate retirement at age 50.
If you elect to begin your immediate retirement and are under age 62, you’ll automatically receive the supplement as well. The amount of the supplement is roughly based on the amount of Social Security you can expect to earn at age 62, and you can find that estimate on page 2 of your Social Security statement. Once you’ve confirmed that amount, you’ll take your years of creditable service and divide by 40. For example, if your Social Security estimate at age 62 is $1800 and you have 27 years of creditable service, your supplement will be $1800 x 27/40, or $1215.
One thing to be careful of is that the FERS supplement is subject to an earnings limit, and if you exceed that earnings limit, your supplement payment will be reduced. However, the earnings limit only applies once you reach standard minimum retirement age, which ranges from age 55 to 57 depending on date of birth. As a special provisions employee, you might well be eligible to retire before minimum retirement age.
Once the earnings limitation does apply – that is, once you reach the normal minimum retirement age and until age 62 – your supplement is reduced by $1 for every $2 you generate in earned income above the income limit ($18,240 in 2020).
To sum up, the FERS supplement for special provisions has a few key differences as follows:
- Because standard minimum retirement age rules don’t apply, you can apply for immediate retirement – and begin receiving the supplement – at an earlier age
- If you retire and begin receiving the supplement before minimum retirement age, the income limitation on the supplement won’t apply until you reach the normal minimum retirement age
While the supplement isn’t likely to be a large amount of income, the more guaranteed, dependable income you have early in retirement, the more likely your retirement plan’s success. As you assess your retirement readiness, make sure you understand the ins and outs of the FERS supplement and what amount, if any, your benefit will be.