The FERS Special Retirement Supplement is the benefit that lets many federal employees retire before 62. But because it stands in for Social Security, it comes with one of Social Security's strings attached: an earnings test. Take a job after you retire, earn above the annual limit, and your supplement is trimmed. This is the rule that surprises people most — so let's make it plain.
The 2026 earnings limit: $24,480
For 2026, you can earn up to $24,480 from wages or self-employment before the earnings test touches your supplement. That figure is the same as the Social Security annual earnings test exempt amount, and it's adjusted most years for inflation — it was $23,400 in 2025.
Earn a dollar over that limit and the reduction begins. But it's not dollar-for-dollar — it's gentler than most people fear.
How the reduction works: $1 for every $2
Above the limit, OPM reduces your supplement by $1 for every $2 you earn over $24,480. So earning over the limit doesn't erase your supplement — it tapers it. You'd have to earn quite a lot before the supplement disappears entirely.
You earn $34,480 — $10,000 over the limit
$10,000 over ÷ 2 = $5,000 reduction for the year
If your annual supplement was $14,400 ($1,200/mo), you'd keep about $9,400 that year.
You earn $24,000 — under the limit
$0 over the limit = no reduction
Stay at or below $24,480 and your supplement is untouched. A part-time schedule can keep you under it.
What counts as "earnings" — and what doesn't
This is the part worth reading twice, because what doesn't count is what saves most retirees. The earnings test only looks at earned income: a paycheck or net self-employment income. It completely ignores:
- Your FERS pension
- TSP withdrawals — traditional or Roth
- Investment income — dividends, interest, capital gains
- Rental income
So a retiree living on their pension and TSP, not working a wage job, keeps the full supplement no matter how large those withdrawals are. The test is purely about working income, not retirement income.
Pro Tip
If you're choosing between drawing more from your TSP or taking on more paid work in your late 50s, remember the supplement only penalizes the paid work. Leaning on TSP withdrawals to cover a gap year won't cost you a dollar of supplement, while the same income from a W-2 job might.
The timing: why the cut shows up a year later
The reduction isn't taken in real time, which trips people up. OPM sends an annual earnings survey (Form RI 92-22), you report what you earned, and any reduction is applied the following year — typically starting in July. So earnings in 2026 reduce your supplement beginning around July 2027.
The flip side is good news: if your earnings later drop back below the limit, you can ask OPM to restore the full amount. The reduction follows your actual income year to year.
Watch Out
Because the cut lands a year late, it's easy to spend as if the full supplement is permanent — then get surprised when a reduced check arrives the next summer. If you work the year you retire, set aside for the true-up rather than counting on the full amount continuing.
Who's exempt: special-category employees
If you're a law enforcement officer (LEO), firefighter, or air traffic controller (ATC) who retires under your special provisions, you get a real break: the earnings test doesn't apply to your supplement until you reach your Minimum Retirement Age. Since many special-category employees retire well before their MRA, this can mean several years of working a second career with no reduction at all. Once you hit your MRA, the normal test kicks in.
When the supplement ends regardless
No matter your earnings, the supplement stops the month you turn 62 — the age you become eligible for Social Security itself. The earnings test only matters in the window between your retirement and 62. After that, if you keep working and claim Social Security early, a similar (but separate) Social Security earnings test may apply instead.
Is the FERS Supplement being eliminated?
You've probably seen the headlines, so here's the straight answer: no — it was not eliminated. A provision to end the supplement for future retirees (effective 2028) passed the House as part of the One Big Beautiful Bill Act, but the Senate removed it before the bill became law. The law as enacted does not touch the supplement. It remains fully in effect for 2026.
That said, this idea has appeared in multiple budget cycles, so it's reasonable to keep an eye on it. If you're planning to retire before 62 in the next few years, the sensible posture is to plan as though you'll receive the supplement — because under current law you will — while staying aware that the rules could change for future retirees.
Federal Employee Note
If a change ever does pass, every proposal so far has protected people already entitled to the supplement before the cutoff date. The risk has consistently been aimed at future retirees, not those already receiving it.
How to keep more of your supplement
A few practical levers, if post-retirement work is in your plans:
- Know your limit and pace your work. Staying at or under $24,480 in earned income keeps the full benefit. A part-time or seasonal schedule often fits neatly under it.
- Lean on income that doesn't count. Pension and TSP withdrawals don't trigger the test, so they can carry a gap year without reducing your supplement.
- Time a high-earning year. If you'll earn well above the limit, doing it in a single year (rather than spreading it) concentrates the reduction instead of trimming several years of supplement.
- Map it against your whole picture. The supplement is one stream among several — the smarter question is how your pension, supplement, TSP, and eventual Social Security stack into one monthly number.
That last point is exactly what the Stone Rose FERS Retirement Calculator is built for, and it's the heart of The Federal Employee's Financial Playbook — which walks through the supplement, the earnings test, and full FERS, TSP, FEHB, and Medicare coordination in plain language. If you're still working out the dates, start with when you can actually retire.
Frequently asked questions
What is the FERS supplement earnings limit for 2026?
$24,480 — the same as the Social Security annual earnings test exempt amount. Earn up to that from wages or self-employment with no reduction; above it, your supplement drops $1 for every $2 over. It was $23,400 in 2025 and adjusts most years for inflation.
What income counts toward the earnings test?
Only earned income — wages and net self-employment. It ignores your pension, TSP withdrawals, investment income, and rental income. A retiree living on pension and TSP without a wage job keeps the full supplement.
When does the earnings reduction take effect?
Not in real time. OPM uses an annual earnings survey, and any reduction is applied the following year, usually starting in July. So 2026 earnings reduce your supplement around July 2027. If your earnings later drop below the limit, you can have the full amount restored.
Is the FERS supplement being eliminated?
No. A provision to eliminate it for future retirees passed the House but was removed by the Senate before the bill became law, so the enacted law doesn't affect it. It remains in effect for 2026. Similar proposals could resurface, so it's worth monitoring — but nothing currently changes your eligibility.
Are special-category employees subject to the earnings test?
LEO, firefighter, and ATC retirees are exempt from the earnings test until they reach their MRA. After MRA, the normal test applies. Because many retire before their MRA, they can often work freely in the first years of retirement.