Once you are approved for Federal Disability Retirement, one of the greatest benefits is the ability to work in the private sector. Federal Disability Retirement can provide a great financial safety net for years to come but working in a new job, in addition to your monthly annuity payments, can make an even bigger difference for your future.
Working While on Federal Disability Retirement
Like we mentioned, the ability to work in the private sector is an amazing benefit of Federal Disability Retirement. You can find a job in the private sector and earn up to 80% of your previous position’s current salary.
You will be able to make this on top of your Federal Disability Retirement annuity payments, which means you can make more money than you were making while in your federal position.
Earned vs Passive Income
Keep in mind that only earned income counts towards the 80% income cap while working in the private sector. These are wages you earn in exchange for goods or services.
Passive income does not count against your Federal Disability Retirement income cap, and this is things like annuities, pensions, withdrawals from your 401k or TSP, unemployment compensation, and gambling earnings.
It’s important to speak with an experienced financial advisor to understand your income, so you do not accidentally exceed the earning cap and lose your annuity.
Employment Opportunities
We have seen federal workers find a new passion while exploring jobs after Federal Disability Retirement, but you are also able to find jobs within your niche in the private sector.
Remember, your new job cannot have the same essential functions of the job that you retired from, as you proved to the OPM that you could not perform that job due to your disability. Doing the same kind of tasks and duties you said you couldn’t do in your federal position could get your benefits taken away.
*Important Note
The OPM will send out annual income reviews to ensure that you are not exceeding the 80% earning cap. If you are found to be making more than the income limit, you will be considered administratively recovered and your annuity payments will stop.
While these ideas are not your only options by any means, we strive to provide Federal Disability Retirement annuitants with as many resources as possible, so you can feel confident in the choices you make for your future.
If you are looking to apply for Federal Disability Retirement, schedule a FREE consultation with our firm to learn how we can help.
