Should a Federal Employee Ignore Their Social Security Windfall?

Should a Federal Employee Ignore Their Social Security Windfall?

Source:
OPM on FERS and Social Security

No, a federal employee should not ignore their Social Security windfall—but how they factor it into their retirement planning depends on several key elements, especially their retirement system (FERS or CSRS), and the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO), if applicable.
Here’s how to think about it:
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1. FERS Employees
• Yes, you should count on your Social Security.
• Federal Employees Retirement System (FERS) employees pay into Social Security, so they are eligible for full Social Security benefits (assuming 40 credits).
• This is a critical income stream in retirement, often making up one-third to one-half of retirement income when combined with a FERS pension and TSP withdrawals.
• Don’t ignore it. Instead:
o Consider delaying benefits to age 70 to maximize payout.
o Factor it into your income replacement rate.

2. CSRS Employees
• Most Civil Service Retirement System (CSRS) employees do not pay into Social Security from their federal job, though they may have outside work that qualifies.
• If you receive a CSRS pension and Social Security from other non-federal work, the Windfall Elimination Provision (WEP) likely applies, reducing your Social Security benefit.
• You’ll still receive something, but less than the standard formula.
• Don’t ignore it—instead, estimate your WEP-adjusted benefit using the SSA WEP calculator.

3. Spousal and Survivor Benefits
• If you qualify for a spousal or survivor Social Security benefit and also receive a federal pension, the Government Pension Offset (GPO) may reduce or eliminate the Social Security spousal benefit.
• Again, not something to ignore—get a detailed estimate from SSA.

Summary: Why You Shouldn’t Ignore It

System                               Should You Factor In SS?                                           Why
FERS ✅                                 Absolutely                                       It’s a key part of your retirement income.

CSRS                                     ⚠️ Yes, with caution                     WEP or GPO may reduce benefits, but it still matters.

Mixed Service ✅               Definitely                                         Especially if you paid into Social Security part of your career.
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📌 Action Steps
• Get your Social Security Statement from SSA.gov.
• Use the WEP and GPO calculators if you’re CSRS or have a federal pension plus outside SS earnings.
• Factor the timing of when to claim benefits into your retirement strategy.