CSRS Offset, and What Happens at 62

CSRS Offset covers a specific group: employees who had CSRS service, left federal service for more than a year, and returned after 31 December 1983 with at least five years of prior civilian service. They pay into Social Security and into CSRS at a reduced rate, and they earn a CSRS annuity under the ordinary tiered formula.

Then at 62 something happens that no other federal retiree experiences: the payment from OPM drops, by an amount that is often over a thousand dollars a month, and the household’s income does not change at all. That sentence is the whole of CSRS Offset, and almost everything confusing about it comes from seeing only half of it.

What the offset actually is

5 U.S.C. § 8349 reduces the CSRS annuity at 62 by the portion of your Social Security benefit that your offset service earned — the years you were covered by both systems, prorated over a 40-year career. You were paying for two benefits and are being paid for one, and the arithmetic that squares it lives at OPM rather than at SSA.

Take a 30-year career with a $92,000 high-3, 22 of those years under Offset coverage, 1,500 hours of unused sick leave, and a Social Security estimate of $1,900 a month at 62:

• CSRS annuity: $52,976.67 a year, $4,414.72 a month.
• Offset at 62: 22 ÷ 40 of the $22,800 annual Social Security benefit = $12,540 a year, $1,045 a month.
• Paid by OPM from 62: $40,436.67 a year, $3,369.72 a month — with Social Security paying the $1,045 back, and rather more besides.

The retiree’s statement shows a $1,045 monthly cut. Their bank account does not, because the offset amount is a portion of a Social Security benefit that is itself larger than the offset. On these figures Social Security pays $1,900 while OPM gives up $1,045, so the household is $855 a month better off at 62 than at 61.

The one case where it is a real loss

The offset applies at 62 whether or not you claim Social Security. If you were planning to delay Social Security to 67 or 70 for the larger benefit, the CSRS annuity is reduced anyway from 62, and nothing arrives to replace it until you file. Five years of a $1,045 monthly gap is $62,700 of income that a full-CSRS retiree in the same job would never have missed.

That does not automatically make delaying wrong — a delayed Social Security benefit is permanently larger and fully indexed — but it does mean the decision has an extra term in it for an Offset retiree that no ordinary retirement-planning article accounts for.

Offset is not Catch-62, despite the shared birthday

Two different CSRS rules reduce an annuity at 62 when Social Security is involved, and they are routinely confused.

• CSRS Offset (§ 8349) reduces the annuity by the Social Security your dual-covered service earned. You paid into both systems and receive both; the reduction is a settling-up.
• Catch-62 (§ 8332(c)) removes credit for military service from the annuity of an employee first hired before 1 October 1982 who never made the military deposit. Nothing replaces it. That one is a genuine cut, and it is avoidable by making the deposit before separation.

Someone can be subject to both, on the same birthday, for entirely unrelated reasons.

Three CSRS rules an Offset retiree still lives under

Offset changes what is paid, not how the annuity is computed. Everything else is ordinary CSRS, which does not behave like FERS:

• The formula is tiered, not flat — 1.5% for the first five years, 1.75% for the next five, 2% thereafter. The marginal year is worth 2% while the average year is worth less.
• There is a hard 80% ceiling, reached at 41 years 11 months of service.
• Unused sick leave is credited outside that ceiling. It is the one way a CSRS annuity exceeds 80% of high-3 — 1,500 hours added $1,226.67 a year to the example above, on top of everything else.

And the survivor election is priced differently again: 55% of the elected base to the survivor, funded from a dollar base with a $3,600 break point rather than a flat percentage of the annuity.

Sources

• 5 U.S.C. § 8349 — the CSRS Offset reduction, and the proration of offset service over a 40-year career. Text of § 8349
• 5 U.S.C. § 8339 — the tiered formula at (a), the 80% maximum and its sick leave exception at (f), the survivor reduction at (j). Text of § 8339
• OPM CSRS/FERS Handbook, Chapter 50 — computation under the general formula. Chapter 50 (PDF)

Figures computed with lib/csrs-annuity.js. OPM computes the offset from its own Social Security figure obtained from SSA, not from the estimate on your statement, so treat every offset figure — ours included — as an approximation of what OPM will produce.

This guide is informational only. It is not financial, tax, or legal advice, and FedAnnuity is not affiliated with OPM or the U.S. government. Retirement rules turn on the specific facts of a career, and only your agency and OPM can give you a binding figure.

Last reviewed: August 2026 · Against 5 U.S.C. §§ 8349 and 8339, and OPM Handbook Chapter 50.