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The Federal Employees Retirement System (FERS) provides retirement and disability benefits to eligible workers. If you become disabled, you may be eligible to receive FERS disability retirement payments which are different from regular retirement benefits. There are specific requirements that need to be met before you can qualify for federal disability retirement benefits and the amount you receive can vary based on your age, length of service, earnings and whether you also receive Social Security disability benefits. Here’s more on how these benefits work and who may qualify for them.

A financial advisor can give invaluable guidance as you sort through your options for retirement.

FERS Disability Retirement Benefits, Explained

The Federal Employees Retirement System covers eligible federal workers and U.S. Postal Service employees. This program offers several retirement benefit options, including:

  • Disability retirement
  • Early retirement
  • Voluntary retirement
  • Deferred retirement

Disability retirement benefits are designed for federal or Postal Service employees who have become disabled and are no longer able to work. Specifically, the federal Office of Personnel Management (OPM) states that employees should consider applying for disability retirement “only after you have provided your employing agency with complete documentation of your medical condition and your agency has exhausted all reasonable attempts to retain you in a productive capacity, through accommodation or reassignment.”

Who Is Eligible for Federal Disability Retirement Benefits?

The OPM sets clear guidelines on who can qualify for FERS disability retirement benefits. In order to qualify, you have to meet all of the following conditions:

  • You must have completed at least 18 months of federal civilian service creditable under the Federal Employees Retirement System.
  • You must have become disabled while working in a position subject to the federal retirement system to the point that you can no longer carry out your duties.
  • Your disability must be expected to last at least one year.
  • The agency you work for must certify that it’s unable to accommodate your disability at your current position and that it’s considered you for any similar vacation positions at the same grade or pay level that you’re qualified for, within the same geographic area.
  • You, your guardian or another interested person must apply for FERS disability retirement benefits before you separate from service or within one year following separation from service. The only exception is if you were mentally incompetent on the date of separation or within a one-year window of this date.
  • You must apply for Social Security disability benefits.

You don’t have to be approved for Social Security disability benefits to get approved for FERS disability retirement benefits. But if you withdraw your Social Security disability benefit application, your FERS disability retirement application is automatically dismissed by the OPM.

How Are FERS Disability Retirement Benefits Calculated?

Blind Asian girlUnder the regular federal retirement benefit system, the basic annuity formula is based on age at retirement and years of service. If you retire under age 62 or at age 62 or older with less than 20 years of service, benefits are based on 1% of your high-3 average salary for each year of service. If you retire at age 62 or older with more than 20 years of service then benefits are based on 1.1% of your high-3 average salary for each year of service. However, the amount you can receive in federal disability retirement benefits can depend on your age and the years of service you have when you retire.

Here are some examples of how FERS disability benefits can be calculated.

Scenario #1: You’re age 62 or older at retirement and meet age and service requirements for voluntary retirement.

  • If you’re 62 or older with less than 20 years of service you receive 1% of your high-3 average salary for each year of service
  • If you’re 62 or older with 20 or more years of service you receive 1.1% of your high-3 average salary for each year of service

High-3 refers to the average of your salary for the three consecutive years where you earned the most. Typically, these are the final years of service but it can be any three consecutive years in which you had the highest earnings.

Scenario #2: You’re under age 62 at retirement and not eligible for immediate voluntary retirement

  • For the first 12 months, benefits are calculated at 60% of your high-3 average salary minus 100% of your Social Security benefit for any month in which you’re entitled to receive those benefits
  • After the first 12 months, benefits are calculated at 40% of your high-3 average salary minus 60% of your Social Security benefit for any month in which you’re entitled to receive Social Security disability benefits

Note that you’re entitled to your earned annuity in both cases if it’s higher than the amount you’d get using the 60% or 40% formulas. Once you turn 62, your benefit amount is recalculated to reflect the annuity you would have received if you’d continued working until the day before your 62nd birthday and then retired with federal benefits.

How to Apply for FERS Disability Retirement

If you believe you meet the eligibility requirements for federal disability retirement benefits the next step is applying for them. There are two forms you need to complete:

  • SF 3107, Application for Immediate Retirement
  • SF 3112, Documentation in Support of Disability Retirement

If you’re under age 62 you also have to submit documentation showing that you’ve applied for Social Security disability benefits after leaving your job.

Completing these forms can be confusing but you may be able to get help from your employer. If it’s been less than 31 days since leaving your position, your employing agency will help you fill out the forms and send them to the Office of Personnel Management. If it’s been more than 31 days since separating from service, then your former employer may not be able to help if they no longer have access to your personnel records. In that case, you’d need to forward all the appropriate paperwork to the OPM yourself.

You’re also responsible for providing any supporting documentation that may be required. This can include medical records or other records showing that you received treatment for a disability.

Keeping Your FERS Disability Retirement Benefits

If there’s a change in your disability status that could affect your ability to continue receiving federal disability retirement benefits. The Office of Personnel Management can ask you to submit routine updates on your medical condition to verify that your disability condition hasn’t changed. You have to pay for any medical exams out of pocket and if you fail to complete one as requested, your benefit payments could be suspended.

If you’re under age 60, FERS disability retirement benefits are automatically terminated if:

  • You’re determined to be fully recovered from a disability
  • Your income from wages and self-employment is at least 80% of the current rate of basic pay from the position you retired from
  • You become re-employed in federal service in a position that’s equivalent to the one you retired from

You can, however, get your benefits back if your disability resumes or you no longer exceed the 80% cap on earnings.

The Bottom Line

A woman with one artificial leg at the library

The Federal Employees Retirement System is designed to help federal and Postal Service workers enjoy a comfortable retirement. That includes being able to retire early if a disability keeps you from working. Timing matters when applying for FERS disability retirement benefits so if you become disabled, it’s important to act quickly to complete your application. The amount you receive varies with your age, length of service, earnings and whether you also get Social Security disability benefits.

Tips for Retirement Planning

  • Consider talking to a financial advisor about the best ways to make the most of the federal retirement benefits you may be eligible for. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. With SmartAsset’s financial advisor matching tool, you can get personalized recommendations for professional advisors in your local area. You just need to answer a few simple questions to get started.
  • One key to successful retirement planning is knowing what your Social Security playments will be. A Social Security calculator can quickly give you a good idea of what your monthly payments will be.

Photo credit: ©iStock.com/Drazen Zigic, ©iStock.com/Chansom Pantip, ©iStock.com/FG Trade

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She's worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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