If you’re an employee planning to retire under the Federal Employee Retirement System, you can always take advantage of the Special Retirement Supplement (SRS). This is an awesome stand-in plan for pre-retirees who would be ineligible for Social Security benefits even though they meet the years of service requirement.
The SRS generally provides retirement benefits in addition to the basic annuity for federal employees who get to retire before they turn 62. The process of determining your eligibility or calculating your SRS benefits can be quite taxing as a FERS worker preparing for retirement. Besides, you need to be certain about how your other post-retirement earnings affect your SRS.
Here are a few facts that will help you better understand how the SRS works.
Who Is Eligible for the SRS?
Typically, if you’ve reached the minimum retirement age with at least 30 years of creditable service, you’re eligible for the SRS. The average minimum retirement age is based on your birth year and can range from 55 to 57 years old. Additionally, if you’ve served a minimum of 20 years of creditable service and are 60 years of age, you may be eligible for SRS benefits.
However, there are different SRS rules for Special Provisions Employees such as policemen, firefighters, air traffic controllers, and others. Special Provisions Employees have a mandatory retirement age, making them eligible for SRS benefits from age 50 once they have a minimum of 20 years of service.
Who Is Not Eligible?
The MRA+10 provision for employees who retire after 10 years of service at the minimum retirement age makes you ineligible for the SRS. Also, disabled employees and employees under deferred retirement plans are not qualified to receive the Special Retirement Supplement.
Calculating Your SRS
While you can’t predict how much you’ll receive from the SRS, a rough estimate can sometimes help you know in what range you can expect your SRS to fall. You can calculate your SRS by first dividing your years of creditable service by 40. Then you multiply the result by your projected monthly Social Security benefit. (1) For instance, here’s what your SRS will look like if you retire with 30 years of creditable service by the age of 60, and your projected Social Security is pegged at $2,500 per month.
- 30 ÷ 40 = 0.75
- 0.75 x $2,500 = $1,875
In essence, you’ll receive an estimated $1,875 in SRS until you reach age 62.
Additional Information About the SRS
- The SRS is taxable income.
- You can start receiving SRS from your minimum retirement age up until you start receiving Social Security benefits. That means that no cost-of-living adjustments will affect the supplement.
- SRS is subject to the post-retirement earnings test. So for every $2 of your income above the earnings threshold from self-employment or a W-2 reported income, your SRS will be reduced by $1. In 2021, the earning threshold is reported at $18,960. (2)
- Investment income and other retirement account distributions do not fall under income that will impact your SRS.
Let Bridgerland Financial Help You
The SRS represents an ideal transition between full employment and Social Security for you as a federal employee. You can approach a worry-free retirement knowing that you have the tools to carry out your financial future.
If you think you’ll be earning some side income after retirement or you’d like a personalized calculation of SRS, Bridgerland Financial is a leading financial firm that you can trust. We can help you make informed decisions that will help you secure your financial future. To get started with us, schedule an appointment online or reach out to us at firstname.lastname@example.org or (435) 535-1630.
For further information on financial techniques towards retirement, you can also download our free eBook,Don’t Panic.
David Packer is founder and financial advisor at Bridgerland Financial, an independently managed financial firm in Utah. With 20 years of industry experience, David serves his clients by helping them bridge the gap between their working years and their retirement. He provides tailored, comprehensive financial plans to his business owner and individual clients so they can retire with confidence. David has a bachelor’s degree in finance and holds the Chartered Retirement Planning Counselor℠ (CRPC®) credential. Outside of the office, David loves to spend time with his wife and five kids and stay involved in his community. He currently serves on the board of directors of the Cache Valley Chamber of Commerce. He and his wife, Melonie, spent years as foster parents and eventually adopted their foster children. David loves playing and watching all kinds of sports, including officiating high school sports, and won’t turn down a good board or card game. Learn more about David by connecting with him on LinkedIn.