As a federal employee, when you apply for retirement, there are a number of decisions you need to make that can affect you and your spouse after you separate from service. From deciding on a survivor benefit to choosing to continue your FEGLI coverage, it’s important to weigh the pros and cons because some of these decisions are permanent.
1. Deciding On A Survivor Benefit Option
Keep in mind, unless you elect the 50% survivor benefit, your spouse must provide signed and notarized proof that they accept the 25% benefit or no survivor benefit at all.
50% Survivor Benefit: This option results in a10% reduction of your FERS annuity and allows 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 FERS annuity. Using the same $3,000 monthly gross FERS annuity as an example, the 5% reduction will reduce your gross benefit to $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 pass away.
“Remember — if you decide to drop your FEHB coverage as an annuitant, you’ll never be able to re-enroll.”
2. Deciding To Continue 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. Based on a formula-determined law, Uncle Sam pays up to 75% of the cost of your premium, and you’re responsible for paying the rest, typically about 30%. Remember, if you decide to drop your FEHB coverage as an annuitant, you’ll never be able to re-enroll.
3. Deciding On Keeping Or Dropping FEGLI
During your working years, the Federal Employees Group Life Insurance (FEGLI) basic coverage is appealing because Uncle Sam pays for 33% of the cost of premiums. However, as you age, 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.
And these are only the top three decisions. Don’t wait until the last minute. Connect with an FRC® trained advisor who can help you fully understand your unique benefits and prepare for a successful retirement.
