Earnings test


Q. Hi, I have just retired under FERS after 34.5 years at the U.S. Postal Service. I understand that Social Security will penalize me if I earn more than $17,640 per year. I know they take $1 for every $3 that I earn over that amount. Do I just lose that money?

A. The Social Security earnings test will only apply to the special retirement supplement you are receiving, not your basic annuity. And, yes, any reduction in the SRS for a given year will be permanent. The same is true when you become eligible for a Social Security benefit at age 62.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.


  1. Can you tell me if the OPM change made in 2016 to include SRS being distributed using the same percentage as the FERS annuity is still in effect and if there are any promising challenges to this being reversed?

        • If you are under full retirement age, your Social Security benefit will be reduced by $1 for every $2 in earnings that exceed the annual earnings limit, which is $17,640 in 2019. In the year when you reach your full retirement age, your benefit will be reduce by $1 for every $3 you earn over a different limit, which is $46,920 in 2019. Beginning in the month you reach full retirement age, the offset will end. Note: The only earnings that are counted are those from wages or self-employment.

          • Scenario: Retirement planned for 12/31/2020 at age 60 with June birthday

            When does OPM first apply the “earnings test”?

            If the earnings test takes place as early as spring of 2021, does my annual leave cash out that occurs in early 2021 automatically disqualify me for the supplement starting in Jul 2021? or the first earnings test is not until Spring of 2022 can I earn as much as I want in 2021 knowing that the FERS supplement won’t be reduced until Jul 2022, which will by then be a moot point since I will be age 62 by then?

  2. Do you have to accept the supplement and when you approach $17.000 can you advise OPM not to send you the supplement pay until next year?

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