Delivered on: Tuesday, July 7, 2026

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FERS Special Retirement Supplement

A unique benefit for select FERS employees

• ELIGIBILITY: Who is eligible to receive this benefit
• BENEFIT: What factors are used to calculate the amount
• TIMING: Why retirees experience long delays in receiving payments
• PENALTIES: What causes this benefit to be penalized or eliminated completely

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Prefer to read instead? A Transcript of this Webinar is Below:

Hello and welcome to today’s FedImpact webinar on the FERS Special Retirement Supplement. My goodness, do we get a lot of questions about this program of how it works, who qualifies, how’s it calculated, what’s it based on, when does it start, when does it stop? Lots of questions about the supplement and so we’re going to dive into those details today.

You guys know me. I’m your ProFeds presenter, Chris Kowalik. I am the founder of ProFeds and the developer of the FedImpact Retirement Workshop.

The Retirement Workshop is our flagship program. It’s what we’re known for, but these webinars are a great way to be introduced to a lot more people who have very specific benefits questions and then realize that they actually need a lot more help than they thought with respect to all of their retirement benefits. The workshop comes back into play at that point.

I’m also the host of the FedImpact Podcast, so I love being able to talk about different topics for federal employees. And like I mentioned, our support team is standing by for your questions as well.

FERS Special Retirement Supplement

For today’s topic, we’re going to be talking all about the FERS Special Retirement Supplement, which is a unique benefit for select FERS employees. If we have any of our CSRS employees, those who were hired by the federal government 1983 or earlier, you are certainly welcome to stand by and listen to this material, but none of it will apply to you. Your time might be used better doing something else than today’s session. This is unique to FERS employees.

Agenda

Let’s jump into today’s agenda. We’re going to be talking about eligibility as far as who’s eligible to receive this benefit. What factors are used to calculate the benefit amount?

The timing of why there are these long delays in receiving payments and how long those payments are going to last. And then penalties, what might cause this benefit to be less than what you expected or maybe goes away completely. There are lots of factors that go into this.

And although this is one of the more straightforward government benefits, that’s not saying a whole lot because there’s always way to complicate things and Congress always seems to find a way. Let’s lay a little foundation here. I want to talk about the why behind this program.

Purpose

What is the purpose of the Special Retirement Supplement? The purpose of the Special Retirement Supplement was to provide a benefit that was similar to Social Security, but for FERS employees who retire prior to the age of 62. We know that at 62, that’s your first eligible opportunity for normal Social Security.

And the government essentially said, “Well, if we let people retire prior to that age, we have to do something to bridge that gap.” And the supplement was their way of doing that. This benefit of the supplement is payable between someone’s retirement age up to age 62.

And this benefit will end at 62 when an employee becomes eligible for Social Security benefits, even if they decide not to draw them at that time. Say you want to wait until your full retirement age or 70 or whatever the age is that you might want to wait. You’re welcome to do that.

Just know that this benefit will stop at 62. If we take a quick peek at that blue box on the right hand side, you will see that the FURS special retirement supplement was created as part of the three-legged stool that OPM created under the FERS moniker.

This idea that there was going to be a pension, there was Social Security and the Thrift Savings Plan. All three of those things, those are the three legs of the FERS retirement ensemble that OPM has put together.

In the event that someone is not eligible for Social Security because they’re too young when they retire, the supplement simply takes the place of Social Security in that three-legged stool. That gives you a little bit of background of why the supplement exists.

Eligibility

Let’s talk about eligibility. How does someone become eligible for the supplement? Well, there are a couple of rules. First, an employee must perform at least one full calendar year under FERS. And this might seem like a strange rule today, but it didn’t seem like a strange rule when this program was first created in the ’80s because remember, everyone else was under the old system.

All of these new people were coming in under the new system, but there was an opportunity for people to switch from CSRS into FERS. And that particular rule kept people from bouncing out of CSRS into FERS and collecting this benefit right out of the gate.

If you have been a FERS employee your whole career, you’re going to have to have a whole lot more than on full calendar year to be eligible for this benefit.

And you’ll see why here in just a moment. The second rule is that an employee must retire on an immediate non-disability pension. An immediate non-disability pension. By immediate, we mean that the pension is set to start right away. Not five years from now, not 20 years from now, but now.

It doesn’t mean OPM’s going to get around to paying you right away and that’s okay. The fact that it’s immediately payable to you is the important part.

The second is that it’s a non-disability pension. Someone who qualifies for a disability pension simply is not eligible for the supplement. There are some restrictions that will apply based on the type of retirement that someone retires under.

I alluded to this in the previous bullets, but I want to call these two programs out specifically. FERS employees who retire under the MRA plus 10 rules, that is those who have met their minimum retirement age somewhere between 55 and 57.

They have at least 10 years of service, but they don’t have the 30 that are required to be fully eligible at that time. They will not qualify for the supplement. And neither will deferred retirees.

That would be someone, let’s say they have five years of federal service, but they’re 45. If they exit federal service now, technically they are vested for a pension, but they can’t get it until they’re 62. That is the pure definition of a deferred retirement. They simply are not eligible to receive the supplement that we’re talking about today.

Eligibility for the SRS

Let’s talk about the eligibility and the timing of the special retirement supplement. These two things are going to go hand in hand. We’re going to talk about how it’s calculated and the amount and all that here in a moment. But first I want to talk about who is eligible and when do payments begin.

On the left hand side, you will see a column that says receive SRS immediately. Anybody who retires under these categories, these criteria that we have on the left hand side will be eligible for their SRS to start right away.

Those who have met their minimum retirement age with at least 30 years of service, those who have met age 60 with at least 20 years of service and law enforcement, firefighters and air traffic controllers regardless of how old they are when they retire.

Let’s look to the far right hand side of the screen. These two are people who will qualify for the special retirement supplement, but they are not eligible to receive it right away.

They’re only going to be able to receive the supplement once they reach their minimum retirement age. Somewhere between 55 and 57, depending on the year that they were born.

Anyone who retired under a discontinued service retirement or an early out of Vera, they would be eligible for the supplement and they will receive it once they reach their minimum retirement age.

If last year in the mass exodus of federal workers, if we had a federal employee who was 50 with 20 years of service, they are eligible for the early out. They took it.

They technically are eligible for the supplement, but they will not receive it between their age of 50 up until the time they reach 57. Once they hit 57, that would be their minimum retirement age. T

hey would then be able to get the supplement until the age of 62. Yes, they’re eligible, but just not yet. Same thing with military reserve technicians.

These are a special group of DOD employees who are eligible to technically leave service a little bit early if they lose their military status.

They’re federal workers, but they have a special military affiliation. Those who are 50 with 25 years of service, if they lose their military status, it puts them in the queue to be eligible for the supplement once they reach their minimum retirement age.

And then members of Congress at age 50 with 20 years of service or at their MRA with 25 years of service, if it happens to be that they go out prior to reaching their MRA, they simply start the supplement once they reach that MRA point.

Again, somewhere between 55 and 57 depending on the year that they were born. Since I’ve referenced this phrase, the minimum retirement age several times, I feel compelled to show you the chart. M

any of you are already familiar with this and that’s great. But for those of you who’s a little bit newer to this process, I want to make sure that you’re really clear on what your minimum retirement age is.

For most of you, you are going to be closer to if not already at the age 57 mark. Oftentimes you’re going to hear MRA referred to as age 57. Know that yours might be a little bit before that, but probably not by too much.

MRA is an important factor with respect to determining whether someone is first eligible to retire. And then if they are eligible, do they fall into the right category to be able to receive the supplement right away? Or do they have to wait until they reach this age of their minimum retirement age to receive it?

Calculations

Next up. Let’s talk about calculating the supplement. The good news is, like I mentioned at the beginning, the supplement is one of the more straightforward programs. It is not a terribly complicated calculation as I’ve depicted on this picture, but it can kind of rattle your brain a little bit if you’re not really sure what goes into it.

And more importantly, what doesn’t go into the calculation so that you’re sure to get this right.

How it is Paid

Let’s jump in to how the supplement is paid. The first thing I want everyone to realize is that the supplement is automatic and it is free.

There is not an election to be made. You don’t sign up for this program. You don’t pay for this program. It is just something that automatically happens when you retire and you fall into one of the eligible categories.

It’s also worth noting that this benefit of the supplement does not affect Social Security in any way, shape or form. This is not considered early Social Security. I don’t love it when people talk about the Social Security bridge because it makes it sound as though this is part of the Social Security program when in fact it’s not.

I also want you to realize that this doesn’t affect any of the options that you have for choosing when to start Social Security. It doesn’t make Social Security start right away.

It doesn’t reduce the amount that you’re going to receive once you finally sign up for it. This benefit, although modeled after the Social Security program, is completely separate.

It’s paid out of a completely different set of money. And the rules, although similar, are simply borrowed from the Social Security program and other than that, not really connected. It’s also worth noting that this benefit is paid along with your FERS pension.

When you receive that check from OPM, the pension amount and the supplement, if you’re eligible for it, get added together and that’s what gets deposited each month into your bank account.

This blue box at the bottom is something important. We are going to talk about this on a little bit of a timeline here in a moment, but it’s worth noting that you will not receive the special retirement supplement payments while you are in what we call an interim status.

This is the time that OPM’s trying to finalize your package. Once you begin receiving your finalized pension from OPM, once they have pulled your file and have worked it and they know exactly how much you are going to get, you will then receive that retroactive lump sum payment of all the payments that OPM missed while your file was on hold.

It is technically payable to you right away, but that doesn’t mean you’re going to get it right away. You need to plan for there to be a delay in actually receiving the payment.

The Calculation

Let’s talk about the calculation. There are really two components to this formula. One of them is a little more complicated and one’s pretty simple. The first one is the number of years of FURS service that you have. And that’s going to get rounded up or down to the nearest full year.

It’s worth noting that any time that you had as a CSRS employee or any time that you had for your military years, even though you might have bought back those military years to count in your FERS pension, those years do not get included in the supplement calculation.

Again, even if they count for the pension, because you’ve done all the right things to get credit for those, that’s great for the pension. It does not affect the supplement in any way, shape or form.

The second thing is that part-time service years, if you had any time where you were in a part-time status working for the federal government, for the purpose of the supplement, these are going to be treated as full-time years. You get a little bit of a break here even though you weren’t in a full-time position.

The second component to this formula is the estimated amount of Social Security benefit that you would be eligible to receive at age 62.

Here you’re going to actually look at your Social Security benefits statement where it shows all of the estimates. And it’s weird that we would make a calculation off of an estimate, but in fact, that is the way that OPM is going to look at this.

If you were to start taking your social security benefit at the age of 62, you’re going to look right at your statement at your social security statement at the 62 line, see that number, and that is the number that we are going to use in the following calculation.

Calculating the Benefit

Let’s first cover the formula for calculating the supplement. In that top box, you’re going to see that we are going to take your social security benefit at the age of 62. This is an estimate from your statement. We are going to multiply that times the number of years of FERS service that you had.

Remember, no military, no CSRS time can be included here. And we’re going to divide that number by 40. That will give us the benefit amount on a monthly basis.

Our example here is let’s say that you have 30 years of service and four of those years were military years. We know that those four years might count for your pension and to become eligible to retire, but they don’t count in the actual calculation of the supplement. Although you’ve got 30 total years, you’re only going to use 26 in this calculation.

And when we take a look at your social security benefits statement at 62, it estimates that you’re going to receive $1,200 a month. We’re going to take that $1,200 times 26 years divided by 40. We’re looking at $780 per month.

Some of you might love formulas like this. Others of you just want more of a ballpark. I’ve got a new tool ready for you that I’d like to share. This chart is designed to help you estimate, get a ballpark of your FERS supplement amount. Follow along with me so that you can make this tool useful for yourself.

On the far left hand side, you’re going to see the number of years of FERS service. I’ve shown between five and 40 years of FIR service. Along the top, you’re going to se Social Security at age 62. This is the estimate that is from your statement.

I’ve shown a couple of different numbers so we can get a range. I’ve shown 500, 1000, 1500 and so on all the way up to $3,000 per month. The vast majority of you are going to fall between 500 and $3,000 per month.

Most of you somewhere right in the middle. Let’s say we have an employee that has 30 years of service and $1,500 a month that they see on their social security statement at 62.

We’re simply going to find the intersection of these two numbers and see that the estimate would be $1,125 per month. That’s not too bad for having a benefit that you did not elect and that you did not pay for.

This is a pretty good deal here. $1,125 a month in this example. You can use this to get a ballpark of where you might find yourself with respect to the supplement.

Timing the Payments

Let’s talk about the timing of payments. Everybody wants to know how quickly am I going to get it? Is there going to be a delay? What happens later? Does it automatically stop? All those questions.

The Typical SRS Timeline

Those are great and what we’re going to cover right now. I’ve laid out the special retirement supplement timeline. This is typical. Your results may vary. On the left hand side where that gold X is, that is the date you leave federal service. You walk out the door, you know that your package is still sitting with your payroll office.

Somebody still has to do something with it and then they will eventually send it to OPM. About two months after you retire, you’re going to begin to receive what we call interim pension payments. This is an estimate of what they think your pension’s going to be.

I won’t go into the super great details on that, but they’re going to pay you a little something between now and the time OPM finalizes your retirement claim.

Again, that’s going to take about two months for you to start getting those interim pension payments. Five to seven months after you’ve left government service, OPM is going to finalize your retirement claim and they will pay any retroactive pension payments if they underpaid you.

And they will also pay retroactive special retirement supplement payments. Because remember, while you are in that interim status, you are not receiving the supplement payments.

They’re still due to you. You’re just not actually receiving them during that time. And so OPM is going to count the number of months of payments that they missed for the SRS and they’re going to pay you retroactively.

And then month after month after month, you’re going to continue to receive your pension payment and your special retirement supplement. And that will recur on a monthly basis all the way up until the time you are 62. At that point, the supplement payments stop and you have a decision to make.

You get to decide whether you want to start Social Security benefits at that time or wait. As far as OPM’s concerned, they don’t care which one you do because it has nothing to do with the supplement.

You get to decide wholeheartedly what you want to have happen to Social Security and it has nothing to do with this particular benefit that was payable to you from OPM.

Cost of Living Adjustment

Next up is cost of living adjustments. Cost of living adjustments are something you’re probably familiar with at least hearing about in the news with respect to how pensions are paid to retirees and how Social Security benefits change as well.

With respect to the supplement, there are no cost of living adjustments for any employee. It doesn’t matter what type of employee you were. If you’re a regular employee, if you are a special category like law enforcement, none of that matters.

There are no cost of living adjustments ever for the supplement. This benefit is calculated one time at the time that you retire and it stays the same number all the way until 62 when it stops.

It’s worth noting though that although the payment for the supplement hasn’t gone up over those years while you’ve been receiving it, there is something that has been going up and that is the actual cost of living around you.

The intention is never for there to be no change in cost of living. That is the mark of inflation.

We expect there to be natural inflation as time moves on, but the purchasing power of the supplement money that you are receiving dwindles the longer that you receive it because you’re continuing to feel the effect of inflation rising on everything around you that’s getting more expensive.

Yet the money being deposited into your checking account from the supplement does not change. There’s nothing you can do about it. There’s not a box you can check that says, “Oh no, please sign me up for COLA. That isn’t how this program works, but I think it’s worthwhile to mention that that purchasing power does dwindle over time.

Earning Interest

Next up, let’s talk about the earnings test. What happens if you go out and get another job?

Here’s how this works. The earnings test is a fancy phrase for penalty. We can call it lots of things, but it is a penalty. Don’t let anyone fool you. And it would apply if both of these things are true. If a person is drawing their special retirement supplement benefit and their wages from a job exceed the limit of $24,480 per year.

This number changes each year. This happens to be the number for 2026. And you get an idea of how much money you can go out and make free and clear and keep all of your supplement money.

But once you broach that 24,480 in 2026, once you start making more than that, you’re going to start to lose some of your supplement. And remember that number, that threshold changes each year.

I feel compelled to emphasize that wages are only earned in a current job you have.

We’re not talking about all of the income that you receive like from your pension, your TSP, other investments, 401ks, IRAs that you have. None of that counts for this purpose.

When we’re talking about wages, this is you actually having a job and earning a paycheck. Very, very different. I don’t want you to confuse yourself on this. This is you actually having a job.

Here’s how the earnings test is calculated. The special retirement supplement benefit will be reduced or penalized by $1 for every $2 of earnings that you have above the allowable limit of $24,480.

That penalty that you are going to feel will be assessed the following year. You’re going to earn whatever you earn this year, you’re going to report it to OPM. And then in the supplement payment that you receive next year, it will be reduced by whatever the earnings penalty is for you.

Let’s say that a person has $780 a month in the supplement benefit. When we did all their calculations, that’s what we came up with. Once they make more than about $43,000 a year, they would lose all of their supplement benefits the following year.

There’s a delay in the penalty, but they can go out and make about $43,200. And once they hit that, they have wiped away all of their benefit. For our special provision employees, we do have some special rules here with respect to the earnings test.

Our law enforcement officers, firefighters, and air traffic controllers are not subject to the earnings test that we just described until they reach their minimum retirement age.

That is somewhere between 55 and 57, depending on the year that you were born. Go back and take a look at that chart that we have on a previous slide.

For our special category employees, you will receive the full special retirement supplement benefit until you’ve reached your minimum retirement age.

And once you reach that minimum retirement age, the earnings test will apply based on any of the earned income from wages from that moment in time up until age 62.

Let’s say you are eligible to retire at 50. You will receive the supplement from 50 to 62, but you’re only subject to the earnings test from 57 to 62. If you’re going to go out and make your millions, do it between 55 and 56. Don’t wait until you’re subject to the earnings test to make the big bucks.

Taxes

Next up, let’s talk about taxes. You knew that we were going to have to talk about this. This is the buzzkill of all buzzkills with respect to government benefits.

With respect to taxes on the special retirement supplement at the federal level and the state level, your supplement is going to be taxed as what we call ordinary income.

It’s not earned income because you don’t have a job where you’re earning it each year. You had a job that you earned it long ago and this is a delayed payment to you.

This is going to be ordinary income, which is taxed differently, but the supplement is going to be taxed just like the pension. At the federal level and the state level, and we’re going to talk about both.

The federal level is actually quite simple. That is going to be treated as income for you. At the federal level, there’s no exception to that.

At the state level though, things get a little bit more complicated. Let’s dive into that. For state income taxes, the first pension, including the special retirement supplement, are typically treated as ordinary income at the state level.

There are some retiree friendly states and what we mean by that is that there are some states who don’t tax any income for any resident. And so naturally they’re not going to tax this. They don’t tax anybody.

And then there are some states who normally tax income, but who specifically do not tax the SERS or first pension, again, including this Supplement.

Let’s take a look at those two different categories of states. States with no income tax, these nine states have no income tax on anyone and so naturally they are not going to tax the SERS refers pension or the supplement.

These nine states are states that normally have income tax but have chosen to specifically exclude the federal pension from being taxed at the state level. Again, also including the supplement. Kind of an interesting mix of those groups.

Wrap-Up & Next Steps

Let’s do a quick wrap up of the Special Retirement Supplement just to put a bow on this thing. The Special Retirement Supplement is payable to most federal employees who are retiring under the age of 62. It is based on your years of service as a FERS employee and those Social Security benefits that you are expecting to receive at 62.

Those two things determine the calculation of the amount. That amount is going to stay level until the age of 62 when it stops. And if you make too much, you may not receive it.

Always plan to pay taxes on the special retirement supplement just like your pension. Make sure that you are crystal clear on how that works in the state in which you live.

The supplement is one of those topics important topic. It’s not all that complicated of a program, but there are all these little spokes in the retirement wheel that we have to help people get their arms around so that they really understand how all this works. And our job is not to be the hero and teach you all the things.

Our job is to teach you all the things so that you can be your own hero because it takes someone standing up and saying, “My retirement is my responsibility and I’m going to get all of the information that I need so that I can make great decisions.” And that is exactly how our retirement workshops are organized.

These are in – person sessions. There is no cost for you to attend. These are sponsored sessions that are held out in the community in major metropolitan areas, even some smaller ones that we get out to, but we are all over the country.

I would encourage you to attend. Again, there is no cost for you to register and show up. We’re going to keep you comfortable that day. We’ve got lunch and light refreshments and that kind of stuff.

But in the actual retirement workshop, we cover all of the federal benefits topics and the decisions that are going to need to be made by you with respect to the supplement and every other one of the benefits that you’re going to be deciding as you step into retirement.

Following the workshop in the weeks after, you’re going to have some one-on-one help that’s available to you so that you can get your numbers. I showed you a pretty good cheat to be able to get a ballpark estimate for your supplement, but it’s important to realize how this fits into all of the other calculations that you’re going to be experiencing as a new retiree.

Even if you feel like you’re far away from retirement, now is the time to be able to get these numbers straight to know exactly what you need to do when you make it final. You can see all of the details of all of the workshops that we have nationwide by going to fedimpact.com/attend.

I want to thank you for joining us. Please stay tuned for benefits and news updates. You can find a workshop to attend in your local area by going to fedimpact.com/atend. Remember, there’s no cost to register and to attend those sessions. And the next webinar, you can sign up at fedimpact.com/webinar.

And at that same link, you’re going to be able to see all of the replays for the past sessions that we have recorded and are available for you instantly to be able to watch. Thank you all so much.

We’ll catch you next month.

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For an introduction to a financial professional in our network: FedImpact.com/request-to-meet

Register for our next short webinar: FedImpact.com/webinar

Find a comprehensive retirement workshop for your area: FedImpact.com/attend