The FERS Retiree Annuity Supplement has so far avoided proposed federal benefit reductions, presenting some federal employees with a key decision: continue working to earn a 10% pension bonus or retire at your Minimum Retirement Age (MRA) to receive the FERS supplement. Understanding how each option works is crucial before deciding.
FERS Supplement
The FERS supplement is available to employees who qualify for an immediate, unreduced retirement. This requires reaching your MRA with at least 30 years of service or being aged 60 or 61 with at least 20 years of service. Since Social Security benefits begin at age 62, the FERS supplement bridges the income gap until you’re eligible. The supplement ends once you turn 62.
Earnings Test
Similar to Social Security, the FERS supplement is subject to an earnings test with the same income limits ($22,320 in 2024, $23,400 in 2025). If you retire at, say, age 57 and take a new job, your supplement will be reduced by $1 for every $2 you earn above the limit.
10% Pension Bonus
Federal employees retiring at age 62 or older with at least 20 years of creditable service qualify for a pension bonus. This increases the standard 1% multiplier used for your pension calculation to 1.1%, boosting your annuity by 10%. For example, a $2,000 monthly annuity would increase to $2,200 with the bonus, adding significant value over your retirement.
Which Option Suits You?
You cannot receive both the FERS supplement and the 10% pension bonus. The better choice depends on your goals. The pension bonus provides a smaller monthly increase but lasts throughout retirement and enhances your survivor annuity. Conversely, if you’re eager to retire at your MRA, the FERS supplement can boost your income until you qualify for Social Security.
Uncertain about the best path? Speak with a Federal Retirement Consultant (FRC®) who has the expertise to guide you through your retirement planning.
