Though it’s difficult to think about losing your spouse, you can’t overlook how it may impact the income of the surviving widow or widower when a federal retiree passes away. Even in the best case scenario, a surviving spouse can lose up to half of their deceased spouse’s FERS annuity in addition to losing one of two Social Security benefits. Without planning ahead, your surviving spouse may not be able to cover expenses when you’re gone.
When A FERS Worker Passes Away
As a FERS participant, you can elect to have your surviving spouse receive 50% of your base annuity or 25% of your base annuity. Though electing a survivor benefit reduces your monthly payment, it provides your surviving spouse with guaranteed income and continued coverage under FEHB. If you elect no survivor benefit on your retirement application, your spouse’s FEHB coverage is terminated upon your death.
One Social Security Check Is Gone Forever
An unexpected death of a spouse can significantly reduce household Social Security income for the survivor. Under Social Security rules, a surviving spouse cannot receive their deceased spouse’s benefit in addition to their own retirement benefit. Though Social Security pays the survivor the higher of the two amounts, one benefit check is gone forever.
“A strategic retirement plan anticipates how retirement income changes when a spouse passes away.”
Thrift Savings Plan (TSP) Death Benefits
When your surviving spouse is confirmed as your TSP beneficiary, a Beneficiary Participant Account (BPA) is established in their name. The BPA account balance is invested solely in the G-Fund but once the account is established, your beneficiary can make withdrawals and request interfund transfers like other TSP participants.
However, beneficiaries are not eligible to make contributions to their BPA or take out TSP loans. If there’s an outstanding TSP loan when you pass away, funds will not be distributed until the remaining balance has been foreclosed but your survivors cannot repay a TSP loan. (Note: if your TSP beneficiary pre-deceases you, elect a new beneficiary immediately.)
If Your Spouse Passes Away Before You
When a federal worker’s spouse passes away, the first thing to do is contact the Office of Personnel Management (OPM) and send them a death certificate. They can handle life insurance claims or beneficiary changes, plus other changes like tax withholding and increasing your FERS annuity if there’s been a deduction for a survivor benefit.
A strategic retirement plan anticipates how retirement income changes when a spouse passes away. Connect with an FRC® trained advisor who understands federal benefits and can help you develop solutions to provide your surviving spouse with financial security.
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