Will You Lose Your FERS Supplement in 2026?

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Your FERS Supplement can be reduced, and in some cases reduced to zero for the year, if your post-retirement earned income exceeds the annual earnings limit. The supplement also normally ends when you reach age 62.

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The earnings limit is the risk within your control. If your earned income exceeds the 2026 limit of $24,480, the U.S. Office of Personnel Management (OPM) reduces your supplement by $1 for every $2 you go over.

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A second, longer-term risk is legislative. Lawmakers have considered proposals to eliminate or limit the benefit, though no such change is law today.

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This guide explains both risks, what income actually counts, who is most exposed, and the planning steps to protect your bridge income before you retire.

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The FERS Supplement, formally the Special Retirement Supplement (SRS) under the Federal Employees Retirement System (FERS), is a monthly payment that bridges the gap between an early retirement date and age 62, when you become eligible for Social Security. FERS is the retirement plan covering most federal civilian employees first hired after 1983.

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Not every FERS retiree receives it. The supplement generally applies to certain immediate, unreduced retirements before age 62, not to deferred retirements or MRA+10 retirements.

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According to a Congressional Budget Office (CBO) FY2025 estimate, the average supplement runs about $18,000 per year and is typically paid for roughly three years, though the actual amount varies by individual. Losing it early can materially change your pre-62 income, so understanding what triggers a loss matters.

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Learn how your retirement age affects the FERS Supplement. 

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What Can Cause You to Lose the FERS Supplement?

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Two distinct forces can reduce or end your FERS Supplement, and they work very differently. The first is the annual FERS earnings test, an automatic OPM calculation based on how much you earn from work. The second is legislative change, a policy risk that is real but not currently in effect.

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The earnings test is the one you actively control and the one most retirees encounter. If you return to work and your wages or self-employment income exceed the annual limit, OPM reduces your supplement on a $1-for-$2 basis.

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Earn far enough over the limit and the supplement can drop to zero for that year. Importantly, according to Fedweek, this reduction never touches your basic FERS pension. Only the supplement is subject to the test.

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The second risk is policy. The FERS Supplement has been a recurring target in federal budget proposals because eliminating it would save money.

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As of July 2026, no enacted law eliminates the supplement. The possibility of future legislation is a genuine planning consideration, especially for those still years away from retirement.

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FERS Supplement Earnings Limit for 2026

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The 2026 FERS Supplement earnings limit is $24,480, up from $23,400 in 2025. This figure, according to the Government Executive, is the same annual exempt amount the Social Security Administration (SSA) uses for its retirement earnings test.

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If your earned income for the year stays at or below $24,480, your supplement is not reduced at all.

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Once you cross that threshold, OPM applies a straightforward formula: for every $2 you earn above $24,480, your supplement drops by $1. The reduction is calculated on the prior year's earnings and, according to the Government Executive, takes effect the following July. So 2026 earnings above the limit would reduce your supplement beginning with the July 2027 payment, not immediately.

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A concrete example makes the math clear. Suppose you retire at 57 with a $950 monthly supplement and take a part-time consulting job paying $34,480 in 2026. That's $10,000 over the limit.

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Your supplement falls by half the excess, $5,000 for the year, or roughly $417 per month. That drops your monthly payment from $950 to about $533. Earn enough above the limit and the reduction can wipe out the supplement entirely.

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What Income Counts Against the FERS Supplement?

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Only earned income counts against the FERS earnings test: wages from a job and net earnings from self-employment. A useful rule of thumb from FedTools: if the income is subject to Social Security or self-employment (FICA) tax, it probably counts.

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Just as important is what does not count. According to OPM's own guidance on the FERS Annuity Supplement Survey, many non-work items reported on a Form 1099 are not treated as earned income. That list includes your FERS pension, Thrift Savings Plan (TSP) withdrawals, Social Security benefits, and investment income such as interest, dividends, and capital gains. The TSP is the federal government's tax-advantaged retirement savings plan.

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Rental income is also excluded unless you earn it in the course of your trade or business. One caution: the form the income arrives on does not settle the question.

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Net self-employment earnings do count, even when reported on a 1099. So consulting income on a 1099-NEC is generally subject to the earnings test.

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This distinction creates real planning room. Because TSP withdrawals and investment income sit outside the earnings test, retirees who need to stay under the limit can often draw from those sources instead of taking on additional wages.

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A spouse's earnings also do not count against your supplement. The test looks only at your earned income, not household income.

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Social Security benefits are not earned income for this test either, though in practice the supplement normally ends at age 62, right when Social Security eligibility begins.

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Sources: OPM FERS Annuity Supplement Survey guidance; FedTools; Fedweek.

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Can Congress Eliminate the FERS Supplement?

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Congress could eliminate the FERS Supplement in the future, but it has not done so, and no current law removes the benefit. This is the accurate picture as of July 2026, and it's worth stating plainly because misinformation on this point is common.

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Here is what actually happened. The House-passed version of H.R. 1 (the One Big Beautiful Bill Act) in 2025 included a provision that would have eliminated the supplement for certain future retirees.

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According to the National Active and Retired Federal Employees Association (NARFE), the Senate dropped that provision during consideration, and the law as enacted (P.L. 119-21) did not change the FERS Supplement. Congress.gov and the Congressional Budget Office confirm the House provision, and NARFE confirms its removal before final passage.

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The supplement remains a recurring cost-cutting target. According to the CBO, eliminating it for new retirees was estimated to save roughly $10 billion over ten years, a number large enough that similar proposals may resurface in future budget cycles.

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The responsible planning posture is neither panic nor complacency. Current retirees and those retiring under existing law keep the benefit, but anyone counting on the supplement years from now should treat future legislative change as a possibility, not a certainty. Don't assume elimination unless and until it is signed into law.

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Who Is Most at Risk of Losing the Supplement?

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Not every FERS retiree faces the same exposure. Your risk depends on your age, your retirement category, and how much you plan to work and rely on the supplement.

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Regular FERS retirees under 62 who plan to keep working face the most direct earnings-test risk. If you retire at your Minimum Retirement Age (MRA), the earliest age a FERS employee can retire with an immediate annuity, and take a well-paying second-career job, your earnings can quickly exceed $24,480 and shrink or eliminate your supplement. MRA is typically 57 for those born in 1970 or later.

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Employees planning early retirement who have built their income plan around the supplement are exposed on both fronts: the earnings test if they work, and legislative uncertainty over the longer horizon. The closer your income plan hugs the supplement, the more a reduction hurts.

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Law enforcement officers (LEOs), firefighters, and air traffic controllers (ATC) get a significant advantage. According to FedTools, these special-provision employees are exempt from the earnings test until they reach their MRA (typically 57), so someone who retires at 51 can earn unlimited income for several years without any reduction. After reaching MRA, the standard earnings test applies.

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Mid-career employees relying heavily on the supplement in their future plans carry the most legislative risk simply because their retirement is far enough out that the law could change before they claim the benefit. They have time to adjust, which is also an advantage.

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Planning Steps Before You Retire

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Planning your bridge income starts with estimating the supplement, reviewing your expected earned income, and comparing different retirement income sources. A few concrete steps follow.

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Estimate your supplement and model it with and without post-retirement work. The formula approximates your age-62 Social Security benefit multiplied by your years of FERS service divided by 40. A FERS Supplement calculator can show how different earnings scenarios change your monthly payment.

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Decide how much you plan to work, and keep post-retirement earned income near or below $24,480 if preserving the full supplement matters to you. Where feasible, draw from a TSP calculator-informed withdrawal plan or other investment income rather than wages, since those sources sit outside the earnings test.

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Review the interaction between the supplement, taxes, and your other income. The supplement is taxable as ordinary federal income, so coordinating it with federal retirement tax planning helps you avoid surprises.

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Read our complete guide to FERS Supplement eligibility and benefits.

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Federal Pension Advisors, a retirement planning firm specializing in federal employee benefits, helps federal employees model these scenarios before they commit to a retirement date. If you want a personalized look at how work income, TSP withdrawals, and the supplement fit together, book a personalized retirement review with Federal Pension Advisors.

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The Bottom Line

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The most likely way to lose your FERS Supplement in 2026 is by earning more than $24,480 from work, which triggers a $1-for-$2 reduction the following July. Legislative elimination remains a possibility for the future but is not current law.

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Because the supplement can represent a meaningful share of pre-62 income, model it carefully against your work and withdrawal plans before you set a retirement date. Federal Pension Advisors, a retirement planning firm specializing in federal employee benefits, can help federal employees review these numbers before choosing a retirement date.

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Frequently Asked Questions

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What is the FERS Supplement earnings limit for 2026?

The 2026 FERS Supplement earnings limit is $24,480, up from $23,400 in 2025. If your earned income exceeds that amount, the U.S. Office of Personnel Management reduces your supplement by $1 for every $2 over the limit. According to the Government Executive, this matches the Social Security annual exempt amount.

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What income counts against the FERS Supplement?

Only earned income counts: wages from a job and net self-employment income, including 1099-NEC consulting earnings. According to OPM, non-work items such as your FERS pension, Thrift Savings Plan withdrawals, Social Security, and investment income do not count. A spouse's earnings also do not count against your benefit.

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Will the FERS Supplement be eliminated?

Not under current law. The House-passed version of H.R. 1 in 2025 proposed eliminating it, but according to NARFE the Senate removed that provision before final passage, and the enacted law did not change the supplement. Similar proposals could resurface, so plan with awareness but without assuming elimination.

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Does working reduce my FERS pension too?

No. According to Fedweek, the earnings test applies only to the FERS Supplement, not to your basic FERS annuity. Your regular pension is never reduced no matter how much you earn in retirement. Only the supplement portion is subject to the annual earnings limit and the $1-for-$2 reduction.

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When can a federal employee retire with the FERS Supplement?

You qualify with an immediate, unreduced annuity before age 62, commonly at your Minimum Retirement Age with 30 years of service, or at age 60 with 20 years. The supplement is generally automatic if you qualify, though some early retirement situations, such as a VERA before your MRA, can delay when it begins. It ends the month you turn 62.

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Are LEOs, firefighters, and ATC treated differently?

Yes. According to FedTools, law enforcement officers, firefighters, and air traffic controllers are exempt from the earnings test until they reach their Minimum Retirement Age, typically 57. Someone who retires at 51 under special provisions can earn unlimited income for several years with no reduction to their supplement.

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Disclaimer

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This article is for educational purposes and informs rather than advises. Verify all benefit figures against OPM.gov, TSP.gov, and SSA.gov for the current plan year before making retirement decisions.

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