FERS Pension and Social Security: How They Work Together
/Maximizing Your FERS Pension and Social Security Benefits
As a FERS retiree, you have two major sources of income in retirement which you are entitled to—your FERS pension and your Social Security benefits. Understanding how they work together is key to maximizing your federal retirement income.
How Your FERS Pension Works
Your FERS pension is a guaranteed lifetime benefit which is calculated based on your years of service at your federal job and your salary. Unlike your TSP savings, which can run out, your pension provides steady income for life. It is paid to you on a monthly basis.
When Should You Claim Social Security?
Claiming Early (Age 62): Lower monthly payments but more years of benefits.
Full Retirement Age (66-67): Standard benefit amount.
Delaying to Age 70: Increases your benefit by about 8% per year.
How to Balance Your FERS Pension and Social Security
If you have retired early (Age 62) need immediate income, taking Social Security at 62 may be necessary when your FERS pension and TSP are not enough to make ends meet.
If you can rely on your FERS pension and TSP, delaying Social Security may result in higher lifetime benefits.
Consider spousal benefits and other sources of income before making your decision. Social Security benefits vary depending on family strucure (single, married, divorced after certain amount of time, etc.)
Planning for a Secure Retirement
Combining your FERS pension, TSP withdrawals, and Social Security requires a strategic financial plan. A financial advisor with extensive experience helping federal retirees can help you evaluate different scenarios to maximize your income and tax efficiency.