In this episode, Val explores various facets of Federal Employee Disability Retirement, offering invaluable insights including eligibility criteria, the application process and financial considerations for the future.

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8.18.23: Audio automatically transcribed by Sonix

8.18.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Val Majewski:
Well, welcome back to the Federal Retirement show. I'm your host, Val Majewski, with American Benefits Exchange. As always, appreciate you taking the time out of your schedule to learn about the things that we are sharing, and hopefully this information is pertinent to you, your situation. Now, granted, I know that not every episode is going to be specific to what you're dealing with, but please browse our previous episodes. Go through the different topics that we talked about. Find out some of the information that you're looking for through what we're providing with the federal retirement show. We are here for you and we are looking to provide this information, this education, this training, so you can make the best decisions over the course of your career and make sure that you are set up properly as you move towards retirement. So today is a topic that came up through recent discussions with federal employees, just like you just had it really recent discussion yesterday with a federal employee that was asking about disability and specifically the federal disability retirement and how that works. Going over a little bit of the process, the benefits that are provided, what it all entails. Now, I'm certainly not going to go crazy in depth because every situation is a little different, is unique, but we're going to tackle the basics today and go over federal employee disability retirement. So let's dive into the information and see what we can uncover behind federal employee disability Retiree.

Val Majewski:
So first of all, how does this work? You know, what is this? Who is this for? Well, this is for folks that are considered disabled to the point where they are unable to perform their day to day job under the government. The idea is to not have you retire as a or have file for disability retirement. They would maybe alter your position, try to get you into a spot where you can do partial work, modify duty and and really try to keep you working so you do not have to file for disability retirement. But let's just say that you're at the point where you are completely disabled, unable to perform your work or anything that's similar to it and you want to file for disability retirement. Understand that federal disability retirement is not Social Security disability, right? The two things are separate. So you've got the ability to do this, but just want to make sure that you understand you're at that point in your career, you're at that point in your physical health that this is your last resort where you're saying, I'm going to file for disability benefits, disability retirement. If you do that, you have to go through an approval process, right? You can be denied disability retirement. This is not automatic. You do not think, in my opinion, I'm disabled. I can't perform the major aspects of my job.

Val Majewski:
And, you know, I need to file for disability retirement because, you know, I feel like I'm in a position where I can't do it. No, you need to. Have approval of that. And. You're going to go through that process. And like I said, you can be denied. It is a possibility that you can be denied. Now, if we make an educated decision and you decide, yes, this is something that is my last resort, this is something that I've got to go to. Well, what is the main thing? You had to have at least 18 months of credible service before they'll consider you for disability retirement. Um, that's not a whole lot of time. And most people that I talk to that have are considering this have been working significantly longer for the government. But once you do that, let's say you do get approved, okay? You do get approved and you're going to go through this. You also have to apply for Social Security disability, which is separate. If you're suffering, know total disability. You apply for both. The government considers it a double dip and will consider or will trigger an offset, which I'm going to talk about, but most people are going to apply for both. You get approved for a disability retirement as a Fers employee and I'm really talking about Fers. If you are CSRs and still working, we can have a one off and you can reach out to us separately, but you file for that.

Val Majewski:
Most are going to file for Social security disability and you pretty much you have to sorry, file for Social Security disability at the same time there's it's going to trigger an offset. Now, what does that mean? That means that you're not going to get your full benefit for both. You're not going to get your full fers retirement due to disability and your Social Security disability benefit. There's going to be a little bit of an offset or reduction. Now, how does that work? Well, the calculation is fairly simple, but whatever your high three is, they're going to take 60% of your current high three. The benefits for the first year. So your first year of disability retirement, 60% of your high three -100% of your Social Security disability benefits. So 60% of your high three -100% of your Social Security disability benefits. That's just for the first year. Now for every year thereafter, you're going to get 40% of your hi3 -60% of your Social Security disability benefits. Okay. And this is going to be subject to reevaluation just to make sure that you are still completely disabled, unable to work of any kind. Most people that I talk to, if they're in this position, they are going to stay in this position because they saw when they filed that there was not a chance of of recovery to the point where they were going to do sustainable work within the government.

Val Majewski:
So they filed for disability retirement. But that's the way the benefits are calculated now that will continue continue until age 62. And during that time you still accrue years of service. So let's just say you were 60 years old and you had at least 18 months of credible service. You weren't eligible for regular retirement yet and you were going to file for disability retirement. 60 years old. So you get your 60% of your high three for the first year, -100% of Social Security disability. For the second year, you get 40% -60%, as you can see on the slide. And I'll continue to earn that until I'm 62. At 62, things will change, right? At age 62. Now I'm going to be collecting my regular fers pension. They're going to calculate my regular first pension at that time because I would be eligible for retirement. And they're going to recalculate it. Now, during that time when I was on Social Security disability and Fers retirement disability or disability retirement, I was accruing years of service. So that's a bonus that you get that you're still accruing years of service while you're doing this. Also, you are getting cost of living adjustments in your high three to kind of coincide with what you could have been getting over that time. Pretty awesome stuff there.

Val Majewski:
So that way you've got more years of service, your high threes a little more inflated than it was the day you applied for disability retirement, and then they'll calculate your Fers retirement pay. It'll switch over to a traditional first pension. Now, it's important to note, too, that Social Security disability can continue until your full Social Security retirement age. So the person that I was just chatting with a federal employee yesterday, talking about their desire to and they're not 100% committed but desire to file for and apply for fers disability retirement, They understand that at age 62, the benefits are going to be recalculated into a traditional pension, assuming that they remained fully disabled during the time when there was no other reason to do any recalculation. And they can continue their fers pension beyond that, and then Social Security disability will continue beyond 62 until their full Social Security retirement age, which in this case was age 67 for this employee at this at that point. Now they're they'll be eligible for their full Social Security benefit and they switch over to whatever they're due for that. Now, with this person, we also talked about potentially earning income. Right? Getting another job in retirement. Um, even if they can still do some sustainable work, whether it's, you know, at home or virtually or whatever it might be. They say that maybe they were going to be earning some some money, some income or having a business or some sort of thing.

Val Majewski:
Now, granted, look, when this comes down to it, you are disabled to the point where you can't do work and you're going on disability retirement and you're collecting Social Security disability. There is an earnings test for for this for Social Security disability. There is a monthly earnings test that could reduce or eliminate your Social Security disability benefits if you're earning too much money. So if you're earning too much money, which I don't normally recommend, but if you go above that limit, then you can lose your Social Security disability payment. So just something to take into consideration. Now, granted, going back to the beginning, I wouldn't want anybody to be in this position to where you're unable to work, where you're disabled, to the point where you can't do your job, and even any modification of that job. And it would make more sense for you just to file for disability retirement. I hope this does not happen, but if it does, this is something that is available for you. We've already gone back in previous episodes and talked about disability for federal employees. While you're working, you do not have traditional disability insurance from the government While you're working, you have sick leave, annual leave. That is your paid time off. Basically if you get disabled and you're unable to work. Your next step beyond leave is to file for disability retirement if the disability is bad enough.

Val Majewski:
So they really don't give you kind of a bridge in the middle. We've talked about private disability insurance that you can throw in as a bridge so you don't have to use up all of your leave. You can file for a disability insurance claim that would then bridge the gap while you're making a decision to see if disability retirement is right for you. But if it's a recoverable thing, something you're going to recover from and come back or go back to work for you, you'd rather not be in leave without pay status. You'd rather entirely and not have any money coming in. If you get to that point, you'd rather have an insurance policy that's going to make up the difference on a monthly basis so you can still pay your bills. But in the end, if, say, that policy runs out or if you just decide, look, I am at a point where I am no longer able to work due to this disability, then you do have the. The choice to file for disability retirement and continue through the process that we just mentioned. So just like I said, go back to the beginning. I hope this is not something or a point that you go to. I want you to live happy, healthy lives during your career and live that same happy, healthy life in retirement.

Val Majewski:
That is our goal when we walk federal employees through these processes. But I know that things come up and you need to know what all of your options are and all you're entitled to and what your your things are that you can can do to help best you and your family. So reviewing what we talked about today, you do have the ability if you are in a position to file for disability retirement as a federal government employee, you must also file for Social Security disability. And you will get a portion of your high three minus your disability payment in the first year. Beyond the first year, it's a lower percentage of your high three, minus a lower percentage of your Social Security disability payments. And if you're disabled for an extensive period of time, your Fers disability retirement will shut off at age 62. It'll revert to a traditional first pension. You can continue your Social Security disability payments until your full Social Security retirement age. Again, we talked about the earnings limit. So if you have any questions about this, I said it was going to be general in nature talking about disability retirement. From the federal government. But if you have specific questions you want to consider this, you want to go over the process, You want to see what what is the application look like for disability retirement. Reach out to us. Go to our website.

Val Majewski:
Federal retirement. Show.com there's a form there. You can fill out the schedule a full benefits and retirement analysis or just to get your specific questions answered. But most will also want to do a full benefits and retirement workup so you can see exactly where you stand. In addition to getting those other questions answered for those that complete the full workup, full benefits and retirement review, you can also get a copy of our book, a complimentary copy of the book. There's no excuse that I wrote to walk you through your benefits and retirement situation. So I really appreciate you taking the time out to view this episode and to go back and view all of our other material. Because look, as I said earlier, this is for you. Why did we do the federal retirement show? Why have we started it? Why do we continue to provide this information? It is so you can make the best decisions throughout your working career and be as prepared as possible, if not over prepared for that blessed day. When you walk out with your head held high, knowing that you retired on your terms and you know exactly what you're going to get and you're going to live the lifestyle that you want when you finally do retire. So again, my name is Val Majewski with American Benefits Exchange. You've been watching the federal retirement show, and I look forward to seeing you on a future episode. And.

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