Q: I am 56 and was just shy of 30 years of service (21 years in CSRS and the rest FERS) as a GS-1811 before I retired at the end of 2007. Because I do not meet the MRA to collect Social Security benefits, I receive a FERS supplement instead. When I retired, my monthly Social Security benefit was calculated according to the annual salary that I had earned as a federal employee (GS 15). To subsidize my retirement, I now work for myself, and my annual salary is a lot less than I received as a federal employee. Because I work for myself, I also pay a larger Social Security tax. However, I have noticed that my monthly Social Security benefit has been decreasing based on my lower annual salary. It feels like I am being penalized for working.
A: Let’s start out by getting one thing straight. You aren’t receiving a Social Security benefit nor, at your age, are you eligible to receive one. What you are receiving is the special retirement supplement, which approximates the Social Security benefit you earned while a FERS employee. That benefit is paid by the Civil Service Retirement Fund, and will continue to be paid until you are eligible for a Social Security benefit at age 62. However, the SRS is subject to the same earnings limit as a Social Security benefit. So, if your earnings from wages or self employment exceed that limit, your SRS will be reduced or even stopped. In 2009, 2010 and 2011 that limit is $14,160.