When completing the application for your FERS retirement, one of the most important decisions you have to make is electing a survivor benefit for your spouse. Should you choose a full benefit, a partial benefit or no survivor benefit at all? How much will your annuity (pension) be reduced once you make an election? And what if your spouse passes away before you? Before you make a decision, learn about the ins and outs of all your options.
How Much Does A Survivor Benefit Reduce Your Base Annuity?
Under FERS, you can elect to have your survivor receive 50% of your base annuity when you pass away (a full annuity), or 25% of your base annuity (a partial annuity). The reduction of your base annuity is 10% for the 50% survivor benefit and 5% for the 25% survivor benefit.
If you choose a partial annuity or no annuity at all, your spouse must give their written consent. Keep in mind, in order for your spouse to keep their FEHB coverage after you die, you have to elect either a full or partial survivor benefit.
What Happens When You Choose No Survivor Annuity?
When you elect no survivor annuity, your spouse’s FEHB coverage ends when you die. This means you’ll need to plan for the cost of their healthcare insurance in addition to other expenses they’ll need to pay once you’re gone. Options include purchasing additional life insurance or a lifetime annuity from a private-sector insurer.
“To stop the deduction from your monthly annuity for the survivor benefit, you’ll have to provide the OPM with your spouse’s death certificate and complete the required form.”
What Happens When Your Spouse Passes Away First?
When deciding on electing a survivor annuity, it’s wise to consider the longevity and health of you and your spouse. If the survivor dies before you, money withheld from your FERS annuity for the survivor benefit is lost forever. To stop the deduction from your monthly annuity when your spouse passes away, you’ll have to provide the OPM with their death certificate and complete the required form.
Can You Change Your Survivor Annuity After You Retire?
You can cancel or reduce your survivor benefit within 30 days from the date of your first regular monthly annuity payment. If the 30-day period has passed, but you’re still within 18 months after your retirement date, the only changes you can make are to elect a survivor annuity or increase the amount of the survivor annuity you elected.
Before you elect a FERS survivor annuity, look at how much your spouse will receive from Social Security, your TSP, and other types of retirement income when you pass away. To learn more, connect with an FRC® trained advisor.
Source: https://www.opm.gov/retirement-center/survivor-benefits/
