A new government proposal tied to a provision in the President Trump’s “Big, Beautiful Bill” could drastically reduce the retirement income of long-serving government workers. One of them, who is approaching retirement, could lose up to $110,000.
This government proposal puts veteran Social Security retirement benefits at risk by eliminating a key benefit in the Federal Employees Retirement System (FERS) known as the Special Retirement Supplement, which is a financial bridge offered to certain employees who retire before age 62.
What is the FERS Special Retirement Supplement?
Under the FERS, federal employees receive retirement income from a defined-benefit pension, a Thrift Savings Plan similar to a 401(k), and Social Security. Those retiring before age 62 also get a Special Retirement Supplement from the government, which is intended to replace Social Security income during the gap years.
This benefit has been an incentive allowing federal workers to continue working through to full retirement eligibility. Unfortunately, the new proposal will now eliminate this incentive for employees who will be below 57 on January 1, 2028.
How Many People are Affected?
According to policy experts and federal employees’ advocates, the elimination of the FERS could impact tens of thousands of current and future retirees. Some of these individuals accepted early retirement offers and spent decades in federal service expecting to receive the supplement.
For example, Santa Maria, a federal employee interviewed by the NPR, said that she had intended to work until she turned 57 which is the age required for full retirement benefits, but concerns about mass layoffs under the Trump administration’s agency restructuring pushed her to take an early retirement. The SSA offered her a $20,000 incentive to leave at age 53. Her last day was April 19, just weeks short of her 35-year milestone.
Only after she retired did she learn the supplement might be eliminated.
Why the Change?
Those who support the change argue that the supplement is an outdated and overly generous benefit. Rachel Greszler, a senior research fellow with the Heritage Foundation, called it “a pure windfall benefit” because it gives early retirees access to income meant for later years.
Critics, on the other hand, argue that the comparison is misleading. Their argument is that Federal employees often receive lower salaries compared to workers in the private sector, and therefore, the supplement is meant to compensate for that discrepancy and encourage career-long service.
Groups like the National Active and Retired Federal Employees Association (NARFE) have opposed the cut, saying that it undermines the retirement security of longtime civil servants.
Uncertainty About Future Benefits Leads to Surge in Early Retirements
The broader push for efficiency in government agencies led by the Department of Government Efficiency (DOGE) and workforce restructuring have caused a surge in early retirement among federal employees.
Some federal employees received incentive packages to retire sooner than planned, and many were unaware that some critical components of their expected retirement income, such as the Special Retirement Supplement would be eliminated.
What the Proposed Retirement Changes Mean Going Forward
If the Senate agrees to the cut, Santa Maria estimates that she will lose close to $110,000 over five years, money that she was counting on for her retirement.
If approved, the removal of the Special Retirement Supplement could mark one of the most significant changes to federal retirement in decades. While the measure is framed as a cost-saving move, its impact will be deeply felt by those who made long-term financial decisions based on promised benefits.
Federal retirees and employees nearing retirement are advised to review their retirement plans, monitor developments in Congress, and liaise with their leaders if there are concerns about the effects these could have.