Q &A: Do Social Security Benefits Continue to Increase As Long As You Work?

Q: I am divorced and will be 61 years old later this month. I am eligible to retire now as a federal employee under FERS with almost 21 years of service. I would receive a FERS supplement until the age of 62, when I could start receiving Social Security benefits.

I am considering taking a full time faculty job that I can do from home, but pays significantly less than my current position ($48,000 less). Health issues are a primary motivation. I would have the flexibility to work around my health issues (i.e., get more rest when needed, etc.).

If I were to do this and continue in this new job, would my Social Security benefits continue to increase until I'm 66 years and 4 months old, despite the pay reduction? Would I be better off hanging in there with my current job and retiring at 62? Can I receive the federal FERS supplement for that one year and then just not apply for Social Security?

A:   Thank you for your service.  It's always exciting while a little unnerving to start a new career.


Please keep in mind that your FERS Special Retirement Supplement (SRS) will be reduced by $1 for every $2 you make over the Social Security Income Limit, which is $16,920 for 2017.  So if you make $50,000 in your new position, you would be $33,080 over the limit. Your penalty is 1/2 of that, $16540.  Your SRS would be reduced by $16540.  Once you turn 62, your social security (if you decide to take it) this reduction would continue until you reach your full retirement age.


Now on to your specific question.  Social Security benefits are based on the highest 35 years where you earned the most, inflation adjusted.  So if your income the next few years would replace lower income (possibly early in your career) then yes, your social security benefit would increase.  And yes, you can receive the FERS SRS and then not apply for social security when that comes to an end at age 62.  Hope this helps your decision.  Please consult with a financial professional so you have all the facts about your specific situation that can't be covered in a short Q&A article.

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. Carefully consider your investment objectives, risk factors before investing. Investing involves risk, including the possible loss of principal. Diversification and asset allocation may not protect against market risk. Nothing in this article is intended as legal or tax advice. Please consult with your independent legal or tax advisor to seek advice based on your particular circumstances. For a list of states in which I am registered to do business, you can visit www.adviserinfo.sec.gov and search for my name.


Alexis Hongamen founded FederalRetirementAdvice.com to exclusively help civil servants with their financial planning & investment needs. As a 25 year federal employee & a Chartered Retirement Planning Counselor, he writes about financial matters of concern to government employees & retirees. Contact: alexis@federalretirementadvice.com 407-900-1653

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