Marcus retired from the Department of Veterans Affairs at 58 with 31 years of service. For four years his monthly deposits included something called the FERS annuity supplement, and he barely thought about it. Then his 62nd birthday approached, and a letter from OPM told him the supplement was ending. He assumed he had to claim Social Security right then to fill the gap. He didn't. That assumption is common, and it can cost a federal retiree tens of thousands of dollars over a lifetime.

Start with which system you're in

Your claiming strategy depends on how your career was covered.

FERS employees pay Social Security taxes, earn their own Social Security benefit, and receive a FERS basic annuity on top of it. Most federal retirees today fall here.

CSRS employees generally did not pay into Social Security through federal work. Any Social Security benefit usually comes from other jobs, military service, or a second career. CSRS Offset employees, who had at least five years of CSRS coverage and moved into Social Security in 1984, see their CSRS annuity reduced when they become eligible for Social Security at 62. That offset is a quirk worth checking with OPM before you decide anything.

One piece of good news: the Windfall Elimination Provision and Government Pension Offset were repealed by the Social Security Fairness Act, signed in January 2025. If you worked in both covered and non-covered jobs, your benefit is no longer cut by those rules. If you were affected in prior years, check ssa.gov for the details on adjustments and back payments.

The supplement is not Social Security

The FERS annuity supplement is a bridge payment for people who retire before 62 with an immediate, unreduced annuity. It roughly approximates the Social Security benefit you earned during federal service. It does not apply to everyone. Retiring under MRA+10 (a reduced annuity), deferred retirement, or disability retirement generally means no supplement.

Two facts matter here:

  • The supplement stops at 62 no matter when you claim Social Security.
  • Before you reach your Social Security full retirement age, it can be reduced by an earnings test if you work after retiring.

So when the supplement ends at 62, your income drops unless you replace it. That is the moment many people feel pushed into claiming. But the cut is a cash-flow problem, not a signal to claim.

What claiming early actually costs

For anyone born in 1960 or later, full retirement age is 67. Claim at 62 and you receive about 70 percent of your full benefit, for life. Wait until 70 and you receive about 124 percent. Each year of delay after full retirement age adds roughly 8 percent.

Take Marcus. His Social Security statement projects these monthly amounts:

  • At 62: about $1,890
  • At 67: about $2,700
  • At 70: about $3,350

The gap between 62 and 70 is nearly $1,500 a month, adjusted for inflation every year. Break-even between claiming at 62 and claiming at 70 typically lands in the late 70s to early 80s. If your family history suggests a long life, or you're married to someone who will outlive you, delay looks stronger.

Think of it this way. Delaying Social Security is the cheapest way most people can buy more inflation-adjusted lifetime income. It often beats anything sold by an insurance company.

Using the TSP as a bridge

Here is where the TSP comes in. Suppose Marcus has $600,000 in his TSP. If he claims Social Security at 62, he preserves his TSP but locks in a smaller check. If he waits until 70, he can draw from the TSP for eight years to make up the difference, then enjoy a much larger guaranteed benefit.

He is spending TSP dollars to purchase a bigger lifetime income stream, a trade many retirees would accept if they saw it laid out that way. The TSP offers installment payments, partial withdrawals, and annuity options, and the rules and rates change, so check tsp.gov before choosing a method.

This approach has costs. Drawing the TSP down means less money left for emergencies, for heirs, or for stock market recovery after a bad year. If you're in poor health, or the TSP is all you have beyond your pension, a bridge may not be wise. There's no universal answer.

The married-couple angle

For couples, the higher earner's claiming age matters most. When one spouse dies, the survivor generally keeps the larger of the two Social Security benefits. If the higher earner delays to 70, that bigger benefit becomes the survivor's check for as long as they live.

Pair that with your FERS survivor annuity election. Choosing a full or partial survivor benefit reduces your pension but protects your spouse. Together, these decisions form a single plan, so don't treat them as separate boxes to check.

Taxes can change the math

Your FERS pension is taxable, except for the portion that recovers your after-tax contributions. Traditional TSP withdrawals are taxed as ordinary income. Social Security benefits may be partly taxable, up to 85 percent, depending on your combined income. The thresholds for this tax are not indexed for inflation, so more retirees get caught each year. Check irs.gov for current rules.

Here's the part many people miss. Between retirement and 70, your taxable income may be unusually low if you have no Social Security yet. That can open a window to do Roth conversions at modest tax rates, reducing future required minimum distributions and the taxable share of your Social Security later. Meanwhile, a single large TSP withdrawal in a year when you also collect Social Security could push more of that benefit into taxation. Run the numbers or work with a tax professional before making large moves.

Other things to weigh

  • COLA differences. FERS retirees get a reduced cost-of-living adjustment from the pension when inflation exceeds 2 percent, while Social Security gets the full adjustment. That makes a larger Social Security check more valuable as a hedge against inflation.
  • Medicare. You can enroll in Medicare at 65 regardless of when you claim Social Security. If you haven't claimed, Part B premiums are billed to you directly instead of withheld from your benefit.
  • Working after retirement. If you claim before full retirement age and keep earning, the Social Security earnings test can withhold benefits. The threshold changes yearly, so verify it at ssa.gov.
  • Health. A serious diagnosis shifts the calculation toward claiming sooner. Good health and longevity in the family push the other way.

A practical way to decide

Start by pulling your Social Security statement from ssa.gov and your annuity estimate from OPM. Then do three things:

  1. List your guaranteed income (pension, Social Security) and compare it with your essential expenses. If guaranteed income covers the basics, you have room to delay.
  2. Estimate how many years the TSP would need to bridge, and whether that withdrawal rate feels sustainable.
  3. Decide whether you're protecting a spouse. If so, lean toward the higher earner waiting.

For Marcus, the answer was to let the supplement expire at 62, draw from the TSP at a measured pace, and revisit his plan each year. He ended up claiming at 68, a compromise between his comfort with risk and his wish for a stronger check. You may land elsewhere. What matters is deciding deliberately rather than reacting to a letter.

Benefit rules, limits, and thresholds change. Confirm current figures with ssa.gov, tsp.gov, and irs.gov, and consider a fee-only planner who understands federal benefits before you file.