FERS and Social Security

For over eight decades, Americans have benefited from the Social Security Act, signed into law by President Franklin D. Roosevelt in 1935 in response to the Great Depression. Initially designed to assist older workers, the program has evolved to provide benefits to retirees, individuals with disabilities, and surviving spouses and children of deceased workers. Today, Social Security provides benefits to over 63 million Americans (www.ssa.gov). Additionally, Social Security has been expanded to include health insurance programs like Medicare and Medicaid.

For federal employees, there are various pathways to becoming eligible for Social Security benefits, and for some, there may be no path to receiving these benefits. Therefore, understanding how and when a federal employee qualifies for Social Security is crucial. Once eligibility is determined, the next step is choosing the optimal strategy for when to begin drawing benefits. A well-informed strategy could make a significant difference—potentially tens of thousands of dollars—during an employee’s retirement.

Social Security is primarily funded through payroll taxes. American workers contribute 6.2% of their wages each pay period via the FICA (Federal Insurance Contributions Act) tax, while employers match this amount with an additional 6.2%. There is a limit on annual contributions. In 2021, once a worker reaches $142,800, further deductions for FICA taxes cease until the following calendar year, when a higher wage base limit typically applies.

For federal employees, determining Social Security eligibility begins by identifying which retirement system they are enrolled in.

When can you start receiving Social Security Benefits?

Once eligibility is established, the next step is determining the best strategy for when to begin drawing Social Security benefits. Generally, individuals can start receiving retirement benefits as early as age 62. It’s important to note the phrase “drawing on their own record,” as there are other ways to receive benefits that may vary depending on circumstances.

Understanding the various strategies and circumstances is crucial when making decisions about Social Security. Benefits will be reduced if you begin receiving them at 62. Conversely, waiting until your Full Retirement Age (FRA), which ranges from 66 to 67 depending on your year of birth, allows you to receive the full, unreduced benefit amount. There’s no advantage to waiting beyond age 70, however.

If you delay claiming Social Security between your FRA and age 70, your benefit amount will increase. After age 70, however, your benefit will no longer grow, so there’s no benefit to waiting further to claim retirement benefits.



Additionally, remember that Social Security includes Cost-of-Living Adjustments (COLAs), which increase your benefit amount each year based on inflation from the previous fiscal year. This helps to keep your benefits in line with rising living costs.

Social Security Benefits for FERS Employees

For employees under the Federal Employees Retirement System (FERS), your retirement plan consists of three key components: the FERS pension, Social Security, and the Thrift Savings Plan (TSP).

If you are enrolled in the FERS retirement system, you are likely eligible for Social Security, assuming you meet the required hours worked to earn Social Security credits.

FERS, Social Security, and the Special Retirement Supplement
Most FERS employees can retire as early as age 56 or 57, known as the Minimum Retirement Age (MRA). There are also special provisions for employees who must retire at these ages. For these individuals, the Special Retirement Supplement (SRS) becomes applicable. This supplement is paid by the Office of Personnel Management (OPM), not the Social Security Administration, and was designed to provide additional income between the ages of 55 and 62 for those who retired early either voluntarily or by mandate. The SRS functions with similar rules to Social Security, such as the earnings test, but it is a distinct and separate benefit.

Social Security Benefits for CSRS employees

If you are a CSRS (Civil Service Retirement System) employee, you do not contribute to Social Security, which means you are unlikely to be eligible for Social Security retirement benefits. However, you may still qualify for other benefits such as Medicare under the CSRS program. Keep in mind that Social Security payments for CSRS employees may be subject to limitations under the Windfall Elimination Provision.

Social Security Benefits for CSRS Offset Employees
A CSRS Offset employee contributes to Social Security but has also spent a portion of their career under the CSRS system. The amount of Social Security benefits an Offset employee receives depends on various factors, making it one of the more complex scenarios for federal employees.

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