The Social Security offset in Texas can be confusing, especially for federal employees under the Federal Employees Retirement System (FERS) who retire before age 62. Understanding how the Social Security Supplement and offset provisions work is key to planning a stable retirement income. At United Benefits, our goal is to make these complex rules easier to understand so you can make informed decisions about your future.
What Is the Social Security Offset?
The term “Social Security offset” generally refers to reductions in Social Security benefits that can occur when an individual receives income from a government pension or certain types of employment not covered by Social Security. In Texas, where many retirees have public service backgrounds—such as education, local government, or federal employment—these offsets can have a significant financial impact. The two primary offsets that impact Texas retirees are the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
WEP affects retirees who receive a pension from employment not covered by Social Security, while GPO impacts spousal or survivor benefits. Both can reduce your overall Social Security income. According to the Social Security Administration, the WEP can reduce a worker’s Social Security benefit by as much as half of their pension from non-covered employment. This makes understanding when and how it applies absolutely essential.
The Social Security Supplement for FERS Retirees Under Age 62
Employees covered by FERS who retire before reaching age 62 may be eligible for a benefit called the FERS Annuity Supplement or Social Security Supplement. This payment bridges the income gap between early retirement and the time you become eligible for Social Security. It’s designed to mimic the amount you would receive from Social Security if you could claim it at age 62, but it is funded entirely by the federal retirement system, not the Social Security Administration.
The supplement is available only to those who have reached their minimum retirement age (MRA) and have at least 30 years of creditable service, or to those aged 60 with at least 20 years of service. The supplement ends automatically at age 62 or when you become eligible for Social Security—whichever comes first.
How the Offset Affects Your Benefit
Although the FERS Supplement is a valuable tool, it is subject to the Social Security earnings test. If you continue to work after retirement, your supplement may be reduced or even eliminated depending on your earned income. In 2024, the Social Security Administration allows you to earn up to $22,320 before benefits begin to be withheld. For every $2 earned above this threshold, $1 of your FERS Supplement will be reduced (Social Security Administration, 2024). This rule mirrors the same income test used for regular Social Security benefits before full retirement age.
Texas retirees should also note that if you earn income through non-covered employment—such as work for a state or local government agency that doesn’t contribute to Social Security—your eventual Social Security benefits may be further impacted by the WEP or GPO when you reach age 62. These offsets do not affect your FERS Supplement directly but could influence your long-term retirement strategy.
Why Texas Retirees Are Particularly Affected
Many public employees in Texas, including teachers, police officers, and certain city or county workers, do not contribute to Social Security. These workers participate in retirement systems such as the Teacher Retirement System of Texas (TRS) or Texas Municipal Retirement System (TMRS). When these individuals later qualify for Social Security through other covered employment or a spouse’s work record, the WEP or GPO often applies.
Data from the National Conference of State Legislatures shows that more than one-fourth of all state and local government employees in the U.S. are not covered by Social Security, and Texas is one of the states most affected. This creates unique challenges for retirees who may be relying on Social Security to supplement their pension income.
Strategies to Manage the Social Security Offset
At United Benefits, we work with federal employees and retirees across Texas to help them plan effectively for these offsets. Here are some strategies that can help you manage or minimize their impact:
- Understand your eligibility. Before retiring, confirm your eligibility for the FERS Supplement and estimate the expected amount. This ensures that you know what to expect and can plan for the supplement’s eventual reduction at age 62.
- Be mindful of work income. If you plan to work part-time after retirement, calculate how your earnings may affect your supplement. Remember that income from investment returns or pensions doesn’t count toward the earnings test, but wages do.
- Maximize covered earnings. If you have the opportunity to work in Social Security–covered employment before retirement, doing so may help reduce the impact of the WEP on your future benefits.
- Coordinate with your spouse. If your spouse is also covered by Social Security, consider timing your benefits to maximize survivor or spousal options, taking the GPO into account.
- Seek expert guidance. Partnering with a retirement specialist familiar with both FERS and Social Security offsets can help you create a comprehensive plan tailored to your situation.
Taking a Holistic Approach to Your Retirement Income
Social Security offset rules are built into the legislation to ensure benefit consistency across employment sectors, but they can feel punitive if you’re not prepared. By analyzing your total sources of income—including your FERS annuity, TSP savings, supplement, and potential Social Security—you can make better-informed decisions about when and how to retire.
United Benefits specializes in helping federal employees understand every component of their retirement benefits. We not only break down how your FERS annuity and Social Security interact, but we also provide tools and personalized guidance to help you make the most of your benefits. Explore our comprehensive approach to retirement planning by visiting our Retirement Solutions page.
Key Takeaways
- The Social Security offset in Texas primarily applies through the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), potentially reducing Social Security benefits for public retirees.
- The FERS Social Security Supplement helps federal retirees bridge income until age 62 but is subject to the same earnings test applied by the Social Security Administration.
- Texas retirees often face unique challenges because many local and state government jobs do not participate in Social Security coverage.
- With proper planning—understanding eligibility, managing income, and coordinating with specialists—you can mitigate the effects of these offsets on your retirement income.
Get Help from the Experts
Understanding the Social Security offset and how it applies to your situation in Texas is crucial for building a secure financial future. United Benefits provides personalized federal retirement counseling and financial planning tailored to your career, location, and goals.
Contact the experts at United Benefits for a free consultation to discuss how these offset rules may affect your retirement income and what you can do to minimize their impact. Call us at 866-558-2121 or visit us in person at 3295 County Road 47, Florence, AL 35630. You can also learn more at our website.
With the right guidance, the Social Security offset doesn’t have to take you by surprise. Our team is here to help you make smarter, more confident decisions about your FERS benefits and overall retirement strategy.