Deciding on a FERS survivor benefit is among the biggest decisions you’ll have to make when you complete your retirement application. Since the survivor benefit is designed to give your spouse a monthly income if you pass away first, making a decision depends on your financial situation and longevity – yours and theirs.
Your Spouse Is Automatically Entitled To A Full (Maximum) Survivor Benefit
Your spouse automatically gets a full (maximum) survivor benefit unless they sign a waiver consenting to a partial benefit or no benefit at all. Calling it a “full” survivor benefit is a bit misleading because your spouse receives 50% of your base annuity when you die.
When you choose a full survivor benefit, your monthly annuity is reduced by 10% each month. If you elect a partial survivor benefit, your monthly annuity is reduced by 5% each month. If you elect no survivor benefit at all, there is no reduction of your monthly benefit but your spouse’s FEHB coverage ends when you die.
“Longevity is another factor. If your survivor dies before you, all the money deducted from your monthly annuity for the survivor benefit is lost.”
The Advantages Of Choosing A Partial FERS Survivor Benefit
The top advantage is that your spouse will be able to keep their FEHB coverage when you die and the government will continue to pay its portion of the premium. The second advantage is that your monthly annuity is only reduced by 5% when you choose a partial survivor benefit. Knowing your spouse will continue FEHB coverage when you pass away may well be worth the 5% deduction.
How Much Income Can Your Spouse Count If You Die First?
If your spouse can count on other income after you die, a partial survivor benefit may work to your advantage while you’re still alive and kicking. Take the time to calculate their sources of income after you pass on:
- Income from any balance remaining in your Thrift Savings Plan (TSP)
- Social Security benefits (either as your survivor or as a retiree – whichever is higher)
- Proceeds from life insurance policies
- Income from a 401k they may have after a career in the private sector
- Plus income from investments they can count on
Longevity is another factor. If your spouse dies before you, all the money deducted from your monthly annuity for the FERS survivor benefit is lost. Also consider the age difference between you and your spouse and any health issues affecting your longevity or theirs.
Touch base with an FRC® trained advisor who can help you crunch all the numbers before you make a final decision on electing a survivor benefit.
