Retiring With FERS and Social Security? Here’s How to Time It Right

Key Takeaways

• Coordinating your FERS retirement with Social Security can significantly impact your income and tax situation in retirement.

• Understanding the timeline of eligibility and benefits from both systems helps you avoid early withdrawal penalties and maximize long-term financial stability.

Understanding Your FERS and Social Security Foundation

If you’re covered by the Federal Employees Retirement System (FERS), your retirement income is designed to come from three main components:

• Your FERS basic annuity

• Social Security

• Your Thrift Savings Plan (TSP)

This structure means you need to think strategically about when and how to access each source. Timing it all correctly can make a major difference in both your financial security and tax burden.

When Are You Eligible to Retire Under FERS?

• Also Read: Divorce and Your Federal Pension—What Happens When You Split Assets and How It Could Affect Your TSP
• Also Read: What Happens to Your Federal Benefits After Divorce? Here’s the Lowdown
• Also Read: The Best FEHB Plans for 2025: Which One Fits Your Lifestyle and Budget the Best?

To make your retirement plan work efficiently, it’s important to know your FERS eligibility:

• Immediate retirement: With at least 30 years of service at your Minimum Retirement Age (MRA), 20 years at age 60, or 5 years at age 62.

• Early retirement (MRA+10): You can retire at your MRA with at least 10 years of service, but your benefit will be permanently reduced unless you postpone it.

• Special provisions: Law enforcement officers, firefighters, and air traffic controllers may retire as early as age 50 with 20 years of service.

Your Minimum Retirement Age depends on your birth year. In 2025, it ranges between 55 and 57.

Social Security Eligibility and Timing

You become eligible for Social Security retirement benefits at age 62, but the timing of when you claim them matters:

• Age 62: Earliest you can claim, but your benefit is reduced—by up to 30% if your full retirement age (FRA) is 67.

• Full Retirement Age (FRA): For anyone born in 1963, your FRA is 67 in 2025.

• Delaying past FRA: Increases your benefit by 8% per year until age 70.

FERS retirees often face the decision of whether to take Social Security early, wait until FRA, or delay even longer. Each option has pros and cons depending on your health, other income sources, and overall retirement strategy.

How the FERS Annuity Supplement Fits In

One unique feature of FERS is the Special Retirement Supplement (SRS). This temporary payment is designed to bridge the gap between your FERS retirement and the start of Social Security.

• Eligibility: You must retire with an immediate, unreduced annuity before age 62.

• Duration: Paid from retirement until you turn 62.

• Amount: Roughly equivalent to the Social Security benefit you earned while under FERS.

The SRS ends at age 62, regardless of whether you claim Social Security. If you retire under MRA+10 or delay your FERS annuity, you won’t qualify for the supplement.

Timing Your Retirement to Maximize Benefits

To optimize your retirement, you need to look at how the timing of your FERS annuity and Social Security benefits interact. Here are some strategies to consider:

1. Retire at MRA With 30+ Years of Service

This approach gives you full access to your FERS annuity and the SRS right away. You can then:

• Receive the SRS until age 62.

• Delay Social Security until FRA or later to get a higher monthly benefit.

• Use your TSP to fill income gaps in the meantime.

This path offers steady income and the ability to let your Social Security benefit grow.

2. Retire at Age 62 and Claim Both Benefits

If you retire and claim Social Security at 62, you receive both your FERS annuity and a reduced Social Security benefit. This can work if:

• You need the income immediately.

• You don’t expect to live far beyond average life expectancy.

Be cautious with this route—it locks you into a lower Social Security payment for life.

3. Retire at 60 With 20+ Years of Service and Delay Social Security

This middle-ground strategy lets you:

• Collect an unreduced FERS annuity.

• Postpone Social Security until FRA or age 70.

• Rely on your TSP and annuity to cover the gap.

It’s often a good compromise between early access and long-term income maximization.

Taxes, Penalties, and Coordination

Proper timing isn’t just about maximizing income—it’s also about minimizing taxes and avoiding penalties.

Required Minimum Distributions (RMDs)

Once you turn 73 (for those who reach 72 after January 1, 2023), you must begin taking RMDs from your TSP. Failure to do so results in steep penalties. Align your Social Security and FERS withdrawals with your RMD timeline.

Earnings Test for Social Security

If you work after claiming Social Security before FRA, your benefits may be reduced. In 2025, the earnings limit is $23,480. For every $2 you earn above that, $1 is withheld from your benefits.

This test doesn’t affect your FERS annuity but may apply to the FERS supplement, which is also reduced if you earn too much.

Federal and State Taxes

• Your FERS annuity is taxable as ordinary income.

• Up to 85% of your Social Security may be taxable, depending on your total income.

• Some states don’t tax federal retirement benefits—check your state’s rules.

Coordinating withdrawals and timing Social Security claims can help reduce your taxable income in any given year.

Managing the TSP in Your Timeline

Your Thrift Savings Plan plays a vital role in filling income gaps and offering flexibility. Timing withdrawals strategically can help you:

• Bridge the gap between FERS retirement and Social Security.

• Delay Social Security and allow it to grow.

• Supplement your income once RMDs begin.

You can begin penalty-free withdrawals from your TSP as early as age 55 if you separate from service that year or later. Otherwise, early withdrawals before age 59½ could incur a 10% penalty unless an exception applies.

Health Insurance Considerations

FEHB (Federal Employees Health Benefits) coverage continues into retirement if you:

• Retire with immediate annuity eligibility.

• Have been enrolled in FEHB for at least 5 years before retirement.

Medicare becomes relevant at age 65. Many FERS retirees coordinate Medicare Part B with FEHB. This choice affects:

• Out-of-pocket healthcare costs

• Monthly premium obligations

• Prescription drug coverage

Planning when to retire may depend partly on when you’ll qualify for Medicare and how it integrates with your FEHB plan.

Planning Timeline: What to Do and When

Age 50–55

• Estimate your High-3 salary and future FERS annuity.

• Begin reviewing Social Security statements.

• Check your TSP balance and investment strategy.

Age 56–61

• Determine if you’ll meet eligibility for an unreduced annuity.

• Consider whether the FERS supplement will apply.

• Project income with or without Social Security.

Age 62–67

• Decide when to start Social Security.

• Rebalance your TSP to align with income needs.

• Adjust your withdrawal strategy for taxes and RMDs.

Age 68–70

• Consider locking in the highest possible Social Security benefit.

• Plan for long-term care and estate transitions.

Retirement Timing Is a Long-Term Strategy

Retiring under FERS with Social Security isn’t just about picking a date—it’s about coordinating multiple moving parts. Your FERS annuity, Social Security benefits, TSP balance, tax situation, and health coverage all interact to shape your financial picture.

Choosing the right retirement age takes more than a calendar—it takes planning. Get in touch with a licensed agent listed on this website for professional advice tailored to your goals and timeline.