As you near the end of your federal career, you may be faced with a big decision – keep working to take advantage of the 10% pension bonus or retire at your MRA (minimum retirement age) and receive the FERS supplement. Before you make a choice, it’s important to understand how they work.
FERS Supplement
The FERS supplement is available to employees eligible to retire with an immediate unreduced retirement. That means you meet the minimum eligibility requirements of MRA plus at least 30 years of service or are aged 60 or 61 with at least 20 years of service. Since you must be 62 to file for Social Security, the FERS supplement fills the gap until you’re old enough to qualify. Once you turn 62, your FERS supplement ends.
Earnings Test
Like Social Security, the FERS supplement is subject to an earnings test. In fact, it uses the same earned income limits established by Social Security ($22,320 in 2024, $23,400 in 2025). If you were to retire from federal service at age 57 and take another job, your FERS supplement would be reduced by one dollar for every two dollars you earn over the limit.
“While the pension bonus is less money per month, it lasts for the entirety of your retirement and increases your survivor annuity.”
10% Pension Bonus
Federal employees who retire aged 62 or older with at least 20 years of creditable service are eligible for the pension bonus. This means the normal 1% multiplier used to calculate your pension is increased to 1.1%. This permanently boosts your pension by 10%, so if your monthly annuity would have been $2,000 with the standard multiplier, it would be $2,200 with the bonus. Over the duration of your retirement, that extra $200 per month can really add up.
Which Option Is Better?
As you’ve probably deduced, you can’t qualify for both the FERS supplement and the 10% pension bonus. Which option is a better fit for your retirement depends on your plans. While the pension bonus is less money per month, it lasts for the entirety of your retirement and increases your survivor annuity. However, if you’re ready for a change of pace when you reach your MRA, the FERS supplement can be a powerful tool to enhance your retirement income until you’re able to file for Social Security.
If you’re not sure which strategy makes the most sense for you, reach out to an FRC® trained advisor who can help take the guesswork out of your retirement planning.
