Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

The FERS Supplement: Q&A

The Federal Employees Retirement System annuity supplement is important for those covered under FERS who plan to retire before turning 62. The supplement bridges the time between the onset of retirement and the age you qualify for Social Security retirement—which is generally 62. This benefit provides a source of income that mimics the age 62 Social Security benefit, but is computed using only civilian federal service creditable to the FERS retirement benefit.

About half of all FERS employees are entitled to this benefit when they retire. The supplement ends when a recipient turns 62. After reaching the minimum retirement age until the supplement ends at 62, an earnings test is applied by the Office of Personnel Management that can cause a reduction or elimination of the supplement.

Since the FERS supplement can get complicated, let’s look at some key questions and answers about it.

Who is eligible to receive the supplement?

To receive the supplement, you must be eligible for an immediate, unreduced FERS retirement benefit. Some employees are immediately eligible for the FERS supplement when they retire. This includes those who retire with entitlement to an immediate annuity, such as employees who have reached their minimum retirement...

The Key to a Happy Retirement

Preparing for retirement isn’t just about financial planning. It’s about getting ready mentally for a big transition.

I don’t write about the mental transition to retirement very often since my expertise is in the financial area, especially federal retirement benefits. Also, it’s hard to find good resources or inspiring references on the subject.

That changed this week when I attended a NARFE Florida meeting in Orlando. The Florida federation is the fourth-largest in the National Active and Retired Federal Employees Association, serving about 12,000 members.

One of the presenters was Marc Middleton, a media entrepreneur and TV journalist. His book, Growing Bolder, is about changing the notion that aging is all about taking it easy, managing chronic conditions and avoiding risks. I read the book and found it to be as inspirational as his presentation at the conference.

Middleton and his associates interviewed hundreds of people who are in their 80s, 90s and 100s to find out what keeps them going. These “rock stars of aging,” as he calls them, are doing things like bowling regularly at 108, playing in a ukulele concert at 103, and buying a new Chevy Camaro at 101.

Middleton said...

A Tale of Successful Retirement Planning

Successful retirement planning under the Federal Employees Retirement System is a career-long endeavor. Federal employees who were hired after 1983 have had to plan for retirement using three different benefits: a pension administered by the Office of Personnel Management, Social Security retirement benefits and a tax-advantaged retirement investment program called the Thrift Savings Plan. It’s now possible for someone to have had 35 years of service under this system. That’s a full career in my book.

Today we’ll hear from “Alexander,” an employee who retired at the end of March 2018. He began working for the federal government as a seasonal Park Service employee in the 1970s. He went on to serve as a law clerk in another agency and later as a staff attorney. In 1987, he voluntarily transferred into FERS. He finished his career at the top of the General Schedule pay scale.

Alexander and his wife recently completed their first year of life after retirement. In reviewing our email exchanges over the past year, I was struck by the fact that they continue to plan their life after retirement in the same manner as they planned for his retirement. It looks like they’re...

The Confusing Factor in Calculating Your Retirement Benefit

There are two big factors in computing the value of your federal retirement benefit: your high-three average salary and your length of creditable service. The first is fairly straightforward, but the second can get confusing.

If all federal employees ended their careers exactly 30 or 40 years after they started, figuring length of service would be pretty easy. But, of course, that’s often not the case. Here are some complicating factors in calculating length of service:

  • If documentation of past service has gone missing, making the service difficult or sometimes impossible to verify.
  • If interest on an unpaid balance of a deposit into the retirement system for service not covered by retirement deductions has grown to thousands of dollars more than the original deposit amount. Unpaid deposits can affect eligibility for retirement under both the Federal Employees Retirement System and the Civil Service Retirement System in certain circumstances. In other situations, if an employee doesn't pay a deposit, his or her retirement benefit is reduced by a percentage of the unpaid balance. And in some cases, the service won't be used in the computation of the benefit at all unless a payment is made.
  • If you had...

Can You Count on Social Security?

If you ask a group of federal employees if they are counting on Social Security for their retirement, the younger the group is, the fewer the number of hands that are raised.

Maybe it’s because they’ve been spooked by the following disclaimer, which appears on every Social Security statement:

Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2034, the payroll taxes collected will be enough to pay only about 79 percent of scheduled benefits.

Apparently, younger federal workers aren’t alone in their concerns about their future retirement security. According to recent research from the National Institute on Retirement Security, millennials are the most concerned about financial security in retirement, and are more willing than other generations to save more.

On April 10, Stephen C. Goss, chief actuary at the Social Security Administration, testified before a House subcommittee on issues related to the Social Security trust fund. Under projections in SSA’s 2018 trustees report, he said, in order to avoid depletion of reserves and a sudden reduction in benefits paid, Congress...