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FERS Looks Great on Paper—Until You Realize What Happens at Age 62

Missy E
November 14, 2025

Key Takeaways

Your FERS retirement benefit changes significantly at age 62, especially if you’re relying on the Special Retirement Supplement.
Understanding the full timeline of FERS benefits helps you avoid unexpected income gaps and make smarter long-term decisions.

The FERS Structure: More Than Just a Pension

The Federal Employees Retirement System (FERS) offers a three-part retirement package: a Basic Benefit Plan

, Social Security, and the Thrift Savings Plan (TSP). On paper, it looks like a well-rounded system that provides multiple income streams. But what many federal employees overlook is the key shift that happens at age 62.

For employees who retire under age 62—especially those who retire in their late 50s—there’s a unique temporary benefit built into FERS called the Special Retirement Supplement (SRS). While this feature is incredibly helpful in bridging the gap before Social Security kicks in, it disappears the moment you turn 62, regardless of whether or not you actually claim Social Security.

Understanding the Special Retirement Supplement (SRS)

The SRS is designed to mimic what you would receive from Social Security if you were eligible at the time of your FERS retirement. It serves as a stopgap to help retirees who leave the workforce before 62.

Here’s how it works:

Only available to FERS employees who retire under certain conditions, typically those with at least 30 years of service at age 56 or 57.
Calculated as a portion of your projected Social Security benefit, based only on your years of FERS service.
Paid monthly until you reach age 62, at which point it automatically stops.

This benefit was never meant to be permanent, but its sudden end catches many off guard.

What Really Happens at Age 62

Once you reach age 62, the Special Retirement Supplement ends. This occurs regardless of your decision to start claiming Social Security.

That means if you delay claiming Social Security to increase your monthly benefit—something many financial advisors recommend—you could face a sudden income drop that lasts several years.

This disruption can be jarring. Imagine living with a consistent monthly income from your FERS annuity and SRS, only to see part of it vanish. You might not be ready to begin Social Security at 62, but your cash flow will change regardless.

Income Planning Gaps from 62 to Full Retirement Age (FRA)

The current Full Retirement Age (FRA) for Social Security is 67 for anyone born in 1960 or later. That creates a five-year window between the end of the Special Retirement Supplement and when you become eligible for full Social Security benefits.

You have a few options to fill that gap:

Claim Social Security at 62: But your monthly benefit will be permanently reduced by around 30% if your FRA is 67.
Draw more heavily from your TSP: This reduces your long-term savings and may not be ideal if you expect a long retirement.
Work part-time or return to federal service: Though often unrealistic, some consider it to maintain cash flow.

Each option has trade-offs. That’s why proactive planning is crucial well before you turn 62.

Social Security Isn’t Automatic at 62

One common misunderstanding is that Social Security automatically starts at 62. In reality, you must actively apply for it. And if you do, your benefits will be reduced due to early claiming.

The reduction works like this:

If your FRA is 67 and you claim at 62, you’ll receive just 70% of your full monthly benefit.
This reduction is permanent and affects cost-of-living adjustments (COLAs) moving forward.

Some retirees assume they can wait and still enjoy the same income level they had before 62. Without proper planning, that assumption leads to financial stress.

Medicare Doesn’t Fill the Gap Either

Turning 62 does not bring Medicare eligibility. Medicare eligibility starts at age 65. So if your income takes a hit at 62 and you’re not yet 65, you also can’t rely on Medicare to reduce your healthcare costs.

If you’ve been using Federal Employees Health Benefits (FEHB) coverage, you’ll continue paying full premiums unless you’re also enrolled in Medicare, which could reduce your out-of-pocket costs in some cases. But those savings don’t begin until 65.

This three-year gap between age 62 and 65 can add extra financial pressure if your income has already dropped due to the end of the Special Retirement Supplement.

Thrift Savings Plan (TSP) Strategy Is Key

Your TSP becomes even more critical after the SRS ends. Ideally, you should begin developing a withdrawal strategy at least five years before you turn 62.

Key considerations include:

Required Minimum Distributions (RMDs): These don’t begin until age 73 in 2025, but your TSP strategy may need to be adjusted before then.
Tax implications: Withdrawals from traditional TSP accounts are fully taxable. Understanding how they interact with your annuity and future Social Security is vital.
Withdrawal pace: If you draw too much too early, you risk outliving your TSP. If you draw too little, you might not cover the income shortfall between 62 and 67.

Working with a financial expert who understands public sector retirement rules can help fine-tune this balance.

Retirement Budget Shock Can Be Prevented

Many public sector retirees build their retirement plan assuming income will remain consistent. That’s often true until age 62. After that, unless you’ve prepared, you might experience a sudden drop in monthly income.

The shock often includes:

Loss of the Special Retirement Supplement
Higher healthcare costs before Medicare eligibility
A decision about whether to take early, reduced Social Security
Unplanned TSP withdrawals or overreliance on savings

Being aware of this timeline allows you to prepare your budget accordingly. You may need to downsize expenses or delay certain purchases until your Social Security kicks in at full retirement age.

Why You Shouldn’t Automatically Claim Social Security at 62

The temptation to replace the lost SRS with Social Security is strong. But claiming at 62 locks you into a lower monthly benefit for life.

Delaying Social Security has significant benefits:

For every year you delay past 62, your monthly benefit increases.
Waiting until 67 gives you the full benefit.
Delaying to age 70 results in the highest possible monthly benefit.

It may make more financial sense to use a portion of your TSP or other assets to bridge the gap, rather than locking in a reduced Social Security amount.

Planning Timeline: What You Should Do and When

Proactive planning makes all the difference. Use this general timeline to prepare:

Age 55-59: Estimate your FERS annuity and check your eligibility for the Special Retirement Supplement.
Age 60: Begin reviewing your Social Security estimates and analyze early claiming penalties.
Age 61: Consult a licensed agent to map out income projections, tax impacts, and TSP strategies.
Age 62: Prepare for the SRS to end and have a plan ready to bridge your income until age 67.

Don’t leave these decisions until the last minute. Taking action several years in advance can prevent stress and help you maintain financial stability.

Annuity Adjustments and COLA Considerations

Once you hit age 62, another key change occurs: your FERS Basic Benefit annuity becomes eligible for cost-of-living adjustments (COLAs). But this comes with conditions.

If you retired before age 62, you don’t receive COLAs until the month you turn 62.
If you retire at or after age 62, COLAs apply immediately.

This means delaying retirement by even a few months could have long-term effects on your income, particularly in high-inflation environments.

In 2025, inflation is projected to remain moderate, but COLAs continue to play a major role in preserving the purchasing power of your annuity. Factor this into your broader income strategy.

Taking Control of Your Retirement Future

It’s easy to assume your retirement benefits will carry you through without a hitch. But the FERS structure includes a significant turning point at age 62. If you’re not prepared for the end of the Special Retirement Supplement and the resulting financial changes, your retirement could take an unexpected detour.

By building a multi-source income strategy, staying informed about key age milestones, and working with professionals who specialize in public sector retirement, you can stay ahead of these challenges.

If you’re uncertain about your plan or feel overwhelmed by the timelines and decisions, speak with a licensed agent listed on this website for personalized guidance and peace of mind.