Top 5 Mistakes Federal Employees Make with Social Security

 Federal retirement and social security planning can be a bit tricky, especially when it comes to understanding how Social Security fits into your future benefits. Many federal employees make mistakes that could affect their retirement income. Here are the top five mistakes to avoid so you can make the most of your Social Security benefits.

1. Not Understanding the Impact of the FERS Offset

One common mistake among federal employees is not understanding the FERS (Federal Employees Retirement System) offset. The FERS offset reduces the amount of Social Security you receive if you work for the government. If you’re part of FERS, you’ll pay into Social Security, but when it comes time to collect, your monthly benefit might be lower than it would be for someone outside the federal system. This is because FERS benefits supplement Social Security, and the offset can reduce your Social Security payments.

2. Claiming Social Security Too Early

A lot of federal employees make the mistake of claiming Social Security benefits as soon as they’re eligible at age 62. While it’s tempting to start receiving benefits early, doing so can reduce your monthly payments for the rest of your life. Social Security benefits increase the longer you wait to claim them, up until age 70. So, if you’re able to wait, it’s often better to claim later for higher monthly payments in retirement.

3. Ignoring the Social Security Earnings Test

Another mistake is not paying attention to the Social Security earnings test. If you’re under the full retirement age and still working while collecting Social Security benefits, your benefits could be reduced if you earn too much. The earnings limit changes each year, so it’s important to keep an eye on it. Once you reach full retirement age, however, the earnings test no longer applies, and you can earn as much as you want without affecting your Social Security benefits.

4. Not Coordinating Federal Retirement and Social Security

One mistake many federal employees make is not coordinating their federal retirement with Social Security. Federal retirement systems like FERS, CSRS (Civil Service Retirement System), and others have their own rules about how benefits are calculated. If you don’t understand how your federal pension works in combination with Social Security, you might miss out on important opportunities to maximize your total retirement income. Taking the time to understand how your federal pension and Social Security will work together is key to building a secure retirement.

5. Forgetting About Survivor Benefits

Federal employees often forget about survivor benefits when they plan for retirement. If you pass away before your spouse, your Social Security benefits could be important for their financial security. The survivor benefit allows your spouse to continue receiving Social Security based on your work record, but only if you’ve claimed your benefits or if your spouse qualifies. Failing to understand and plan for survivor benefits can create a financial burden for your loved ones after you’re gone.

Last Words

It’s essential for federal employees to carefully consider how Social Security fits into their overall retirement plan. By avoiding these common mistakes, you can make sure that your Social Security benefits work with your federal retirement to provide the income you need. Understanding Social Security retirement for federal employees is important for securing a comfortable retirement and ensuring that your benefits are maximized. So, take the time to learn the rules and plan for your future!