As a federal employee, when you apply for your FERS retirement it’s important to make informed choices because some of these decisions are permanent.
1. Electing A Survivor Benefit Option
Unless you elect a full survivor benefit, your spouse must provide signed and notarized proof that they accept a partial benefit or no survivor benefit at all. Remember – you have to elect a survivor benefit otherwise your spouse will lose their FEHB coverage when you die.
50% Survivor Benefit: This option will result in a 10% reduction of your annuity and allow your spouse to receive 50% of your pension if you pass away. For example, let’s say your monthly gross FERS annuity is $3,000 it will be reduced to $2,700. When you pass away, your surviving spouse will receive $1,500 which is 50% of your pension.
25% Survivor Benefit. Less costly than the 50% survivor benefit, the 25% option will result in a 5% reduction of your annuity. Using the same $3,000 monthly gross FERS annuity as an example, the 5% reduction will give you a net of $2,850. When you pass away, your spouse will receive $750 per month.
0% Survivor Benefit. Of course, this option costs you nothing. However, without a survivor benefit your spouse will no longer be eligible for FEHB coverage when you die.
“Before you apply for retirement, make sure you meet the requirements of the FEHB 5-year Rule.”
2. Continuing FEHB In Retirement
A big advantage of continuing FEHB into retirement is that the federal government continues to pay the same portion of your overall FEHB premium as it did when you were working. Before you apply for retirement, make sure you meet the requirements of the FEHB 5-year Rule. Otherwise, you and your spouse will lose your coverage and you’ll never be able to re-enroll.
3. Keeping Or Dropping FEGLI Coverage
During your working years, the Federal Employees’ Group Life Insurance (FEGLI) basic coverage is appealing because Uncle Sam pays for approximately 33% of the cost of premiums. However, as you age, all of the FEGLI Options (Basic, A, B, and C) can become cost-prohibitive and you may get a better deal on life insurance from a private carrier.
Other Decisions To Consider Before Applying For Retirement
- Working until age 62 to qualify for the FERS 10% Bonus.
- Or, retire at 60 to get the FERS Special Retirement Supplement (SRS).
- Delay filing for Social Security until age 70 to increase your benefit by 8% for each year you wait.
Connect with an FRC® trained advisor who can help you weigh the pros and cons before you submit your retirement application.
