Q: I am employed by the Defense Department under the Civil Service Retirement System. My service computation date is Dec. 17, 1977, and I will turn 62 on Nov. 16. Prior to entering civil service, I earned enough quarters to qualify for Social Security. I have not selected a retirement date, but I am considering Dec. 31 of this year or January 2011 to receive a payout from the National Security Personnel System. If I retire Dec. 31, I will be reimbursed for all of my annual leave, but after that reimbursement I would be limited to the maximum amount of carryover, which is 240 hours. If I don’t take any additional leave for the year, I would have approximately 208 hours of “use or lose” annual leave.
First, since I earned enough quarters prior to entering civil service to qualify for Social Security benefits, will my CSRS annuity be reduced by some amount because I am eligible for Social Security? If so, how can I determine the amount? Also, if it is going to be offset, should I go ahead and apply for Social Security benefits, or wait to draw at a later date?
Second, my wife is employed and expects to continue working after I retire. I noted that the reduction for a survivor’s benefit under CSRS amounts to several hundred dollars a month. Is it better to take the reduced annuity to have the benefit or purchase term insurance to provide the benefit to the spouse?
Third, to ensure that paperwork is processed in time to avoid delays in receipt of annuity, how much in advance should I submit my retirement papers?
A: As a pure CSRS employee, your annuity won’t be affected by any Social Security benefit to which you may be entitled. However, because you will be receiving an annuity from a retirement system in which you didn’t pay Social Security taxes, your Social Security benefit will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who has fewer than 30 years of substantial earnings under Social Security. As is true of all Social Security benefits, the benefit amount will also be reduced proportionately for every year you are under full Social Security retirement age when you apply for it. Full retirement ages range between 65 and 67, depending on your year of birth.
By law, you must provide a full survivor benefit for your wife unless she agrees in writing to a lesser amount or none at all. It’s up to the two of you to decide whether it would be better for you to elect and pay for a survivor annuity or for you to receive the money in your own annuity.
While there’s no set date for submitting your retirement papers to your personnel office, the Office of Personnel Management recommends that you do so at least three months before the date you’ve set to leave. That will give OPM time to review the paperwork and resolve any questions that may arise. When they are done, they’ll send your application to your payroll office, which can begin its review. Just remember, your application can’t be forwarded to OPM until you are off the agency’s roll. Only then will OPM be able to adjudicate your case.
