Federal Disability Retirement is one of the most valuable benefits available to federal employees dealing with a medical condition that affects their ability to work. Approval doesn't require being unable to work entirely, just unable to perform an essential function of the position. FEHB and FEGLI coverage can continue in retirement, and approved recipients can earn up to 80% of their former position's current pay in the private sector. The annuity is recalculated at age 62 based on years of federal service.
Video Transcript
Read the full transcript312 words
If you're a federal employee dealing with a medical condition that's affecting your ability to do your job, Federal Disability Retirement is one of the most important benefits available to you. Here are five things worth understanding about it.
First, you don't have to be unable to work entirely. Federal Disability Retirement doesn't require that you can't work at all. It requires that your condition prevents you from performing at least one essential function of your current federal position.
Second, your health and life insurance can continue. One of the biggest concerns people have when they think about leaving federal service is losing their coverage. Federal Disability Retirement allows you to keep both your FEHB health insurance and your FEGLI life insurance in retirement.
Third, if you're able, you can still work in the private sector. Once you're approved, you're allowed to work for a private sector employer and earn up to 80% of what your former federal position currently pays without affecting your annuity. This gives you the flexibility to keep generating income while you're on the benefit.
Fourth, age 62 is a significant milestone because your annuity gets recalculated. Up until that point, you've been receiving 40% of your high-three average salary. At 62, the OPM automatically recalculates that amount based on your actual years of federal service, including the time you spend on Disability Retirement. For most people, that new number ends up being lower. So, it's worth planning for well in advance.
And finally, the financial decisions that come after approval matter just as much as the application itself. Things like your TSP, your survivor annuity election, your FEGLI coverage, and the 30-day election window all require careful attention once your retirement is finalized. Having a financial advisor who understands federal benefits in your corner during that process can make a real difference. That's exactly where Harris Federal Financial Advisors comes in.
Ready to review your plan?
These videos cover the general rules. Your numbers are specific to you and need guidance tailored to your situation and goals. Schedule a call with an advisor and walk through your plan.
Schedule Your CallThe content in this library is provided for educational and informational purposes only and does not constitute investment, tax or legal advice, or a recommendation to buy, sell or hold any security or to pursue any particular strategy. It does not take into account your individual objectives, financial situation or needs. Investing involves risk, including the possible loss of principal. Rules governing federal benefits, the Thrift Savings Plan, Social Security and taxation are subject to change, and information presented may not reflect the most current guidance. Consult a qualified professional regarding your own circumstances before acting on any information presented here.