Q. At the time of the last offering to change to FERS, HR encouraged me to switch from CSRS to FERS because I am a widow and my widow’s pension would be severely reduced if I stayed in CSRS. I now have 35 years of service and am 61, and I want to retire from the VA and do something else for a while.
I am a GS-15 equivalent, with my average high-3 earnings at $135,500. HR ran the numbers, which came out as $4,376 for CSRS and then a $1,571 FERS annuity, totaling $71,364. HR is telling me if I get another job that my FERS is going to be reduced $1 for every $2 I earn more beyond $1,400.
First, my annuity is much less than it would be had I stayed with CSRS, and then, if I want to go out and work part time to supplement — and I know I can easily make more than $50K as a consultant — then my FERS supplement gets wiped out.
Why should I get penalized for this? Is this really true?
A: Yes, it’s true. That’s the law. All retirees who are entitled to a Social Security benefit (or the special retirement supplement for FERS retirees) and are below full Social Security retirement age will have that benefit reduced by $1 for every $2 they earn in wages or self-employment that exceed the annual Social Security earnings limit. In 2012, that limit is $14,640. In the year you reach your full retirement age, your benefit will be reduced by $1 for every $3 you earn until the month you reach your full retirement age. After that, there’s no limit on your earnings.