When you are considering filing for Federal Disability Retirement, one of the first questions you might have is “How long will it last?”
In this article, we will explore that question and many other frequently asked questions regarding what happens when you are approved for Federal Disability Retirement and what happens when it’s over.
The good news is that this benefit is intended to be long-term and help you get to your retirement age. This can be helpful for federal employees who are struggling in their job and worried about making it to retirement.
Duration of Federal Disability Retirement
Your disability benefit will begin accruing after your last date of pay at your agency and when you meet the qualification and eligibility requirements. You will receive your first payment on the first business day of the month after your benefit begins.
Federal Disability Retirement is intended to last until age 62. At 62, your benefit will automatically recalculate into your regular retirement. Even if you are in a special provision position with a retirement age of 56 or 57, you will remain on Federal Disability Retirement until age 62.
While on Federal Disability Retirement, you will continue to gain creditable years of service towards your retirement pension.
For example, if you have 10 years of service, and are approved for Federal Disability Retirement at age 50, by the time you turn 62, you will have 22 years of service.
Federal Disability Retirement is often referred to as a “bridge to 62” because it helps disabled employees reach their retirement.
After Age 62
At age 62, your Federal Disability Retirement will automatically convert into your regular FERS retirement, and no further action needs to be taken.
Your annuity will be recomputed as if you had kept working in your federal position until the day before your 62nd birthday and then took a regular FERS retirement.
How much will I receive in retirement?
Regular FERS retirement is calculated using your high-3 average and creditable years of service. Your high-3 average is the average of your 36 highest consecutive months of basic pay.
In retirement, you will receive 1% of your high 3 average for every year of service if you have less than 20 years. If you have more than 20 years of service, you will receive 1.1% of your high-3 average.
If you are a special provisions employee, you will receive 1.7% of your high 3 average for each year of service up to 20, and then 1% for every additional year.
What happens to my insurance?
While on Federal Disability Retirement you will have the option to maintain your health and life insurance, and you will be able to maintain those elections into your regular retirement.
Keep in mind your premiums will rise drastically over time, but you can make changes to those elections during open season.
Can I keep working?
One of the benefits of Federal Disability Retirement is the ability to work in the private sector. If you are under the age of 60, however, there is a limit on your earnings. If you earn more than 80% of your previous position’s current salary, your Federal Disability Retirement annuity will stop.
Once you turn 60, the income cap is lifted, and you can make as much money as you want throughout the rest of your retirement.
What if I’m approved for Social Security Disability Insurance?
One of the application requirements for Federal Disability Retirement is to apply for Social Security Disability Insurance (SSDI). If you are approved for both benefits, there will be an offset, but you will be receiving more money than if you were on one benefit alone.
When you reach age 62, there will no longer be an offset, and at age 65, your SSDI benefits will change to regular social security retirement. You will receive a notice in the mail from the Social Security Administration informing you of the change and how much your new benefit will be.
It’s important to be well informed on all your federal benefits and what happens to them once you hit retirement age. Harris Federal Law Firm strives to educate all federal employees so they can make the best decisions for their future.
We have helped over 8,000 federal employees apply for Federal Disability Retirement and we want to take the weight off your shoulders. Schedule a FREE consultation today to learn more.