The Earnings Limit for Disability Retirement

If you’re 60 or older, there are no restrictions on the amount of money you can make while receiving disability retirement. If you’re under the age of 60,  you can receive income from work as well as disability retirement benefits. Still, your disability annuity will be terminated if the Office of Personnel Management (OPM) finds that you can make an income comparable to what you would have earned if you had kept working. 

For you to continue your disability retirement, the retirement legislation has established an earnings ceiling of 80%. You reach the 80% earnings threshold (or are “restored to earning capacity”) if, in any calendar year, your income wages and self-employment reach at least 80% of the current rate of basic pay for the post from which you retired. 

Any income from wages and self-employment received, as well as deferred income generated in the calendar year, is termed “earnings.” Any money received before retirement is not regarded as “earnings.”

Wage income includes any income earned while working for someone else (including overtime, vacation pay, etc.). Whether at home or abroad, your net profit from working or operating your firm is considered self-employment income. Net profit is the amount left after deducting company expenditures and before removing any personal expenses or exemptions allowed by the IRS. Deferred income is money earned but not received within the calendar year for which you are claiming income less than the 80% earnings threshold. 

If you are employed again by the federal government and your income is reduced by your annuity, the gross amount of your salary before the adjustment is recognized as “earnings” for the calendar year.

Gifts, insurance proceeds, pensions/annuities, Social Security benefits, unemployment compensation, and rents/royals that do not involve or result from personal services aren’t considered earnings. Other things not considered earnings include interest/dividends that do not result from your trade or business, money earned before retirement, inheritances, capital gains, prizes/awards, fellowships/scholarships, and net business losses. 

Furthermore, suppose you are under 60 and unemployed in a job equivalent to the one you had when you retired. In that case, OPM will determine that you have recorded your handicap and will discontinue your annuity payments when this determination is made.

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After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely withhelping them pursue the most comfortable financial life possible.Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.Aaron can help you and your family to create, preserve and protect your legacy.That’s making a difference.

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