How much is a government retirement annuity reduced by employment?

1. How employment can cut your monthly FERS supplement — the mechanics

If you retired under FERS and collect the Special Retirement Supplement (the SRS that bridges you to Social Security), earned income from work can reduce or eliminate that supplement. The reduction follows Social Security’s earnings test: in 2025 the annual exempt amount cited was $23,400 and the penalty is $1 off the supplement for every $2 earned above the limit ^[1]. FedWeek explains that the SRS is distinct from the FERS basic annuity and TSP withdrawals — only earned income from jobs triggers this rule ^[1].

2. Who this affects — age, retiree type and timing

The SRS applies to many FERS retirees who take an immediate annuity and are not yet eligible for their full Social Security benefit; the supplement generally ends at the earlier of eligibility for Social Security, age 62, or other statutory triggers ^{[5] [6]}. Federal Retirement System summaries note the supplement is paid to retirees who are under age 62 (unless disabled or survivor beneficiaries) and that eligibility depends on how and when you retired ^[6].

3. Return to federal service and other employment pitfalls

Returning to work for the government may have special rules but sources emphasize the core point: the SRS reduction is tied to “earned income” in general, not the FERS annuity or TSP withdrawals ^[1]. FedWeek warns that even part-time work can meaningfully affect the supplement given the relatively low earnings threshold ^[1]. FederalNewsNetwork and related outlets advise retirees to “run the numbers” because gaps in pay periods, COLA timing and other interactions can complicate cash flow when annuity and earnings overlap ^{[7] [8]}.

4. Broader legislative context that changes offsets and calculations

Separate from the SRS earnings test, Congress and agencies have been debating larger structural changes that would alter annuities themselves — for example, proposals to change the annuity “high-3” to a “high-5” years calculation or to eliminate the supplement for new annuitants, moves estimated to save billions ^{[9] [10] [5]}. Those legislative proposals would reduce annuity levels for future retirees but are distinct from the SRS earnings-offset mechanism that reduces current supplements when you work ^{[9] [10]}.

5. Recent fixes: repeal of some pension offsets (not the earnings test)

Congress passed the Social Security Fairness Act, which eliminates two statutory reductions (Windfall Elimination and Government Pension Offset) as they applied to railroad retirement and similar cases, restoring tier I benefits retroactive to months after December 2023 ^{[2] [3] [4]}. Those changes address a different kind of offset — reductions of Social Security–equivalent benefits when a person also receives a non‑covered public pension — and do not replace or negate the FERS SRS earnings test described above ^{[2] [3]}.

6. What the sources do not say and practical next steps

Available sources do not mention specific step‑by‑step worksheets that compute the exact dollar cut for every individual circumstance; they describe the rule (the $2-for-$1 penalty and the 2025 $23,400 limit) and outline eligibility parameters ^{[1] [6]}. Retirees should verify their personal situation with OPM or payroll/benefits offices and run scenarios that include part‑time earnings, return to federal service, and proposed legislative changes that might affect future annuity computations ^{[8] [7]}.

Limitations: this overview relies on public reporting and agency summaries in the provided sources. For case‑specific advice and up‑to‑date income limits or post‑2025 changes, consult OPM, agency HR, or the cited briefings directly ^{[8] [1]}.