Survivor Benefits: It’s About More Than Just Money

 

If you’re married and thinking about whether or not to leave your loved one a FERS survivor benefit, know this: it’s about more than just money.

Nobody knows what the future holds and that makes retirement planning tricky.  You have to think about all possible avenues—including some rather unpleasant ones.

The Obligation

Your spouse is legally entitled to a Full Survivor Benefit at your retirement.  Anything less than that requires your spouse’s notarized signature on a form acknowledging that they are waiving their right to a full benefit. 

The Options

Full Survivor Benefit: Your spouse receives 50% (one half) of your FERS pension amount paid to them, every month, for the rest of their life, after your death.

Partial Survivor Benefit: Your spouse receives 25% (one quarter) of your FERS pension amount paid to them, every month, for the rest of their life, after your death.

No Survivor Benefit: Your spouse receives none of your FERS pension after your death.*

The Cost

Full Survivor Benefit: The cost is a 10% fee from your FERS pension while you are living.

Partial Survivor Benefit: The cost is a 5% fee from your FERS pension while you are living.

No Survivor Benefit: There is no cost to your FERS pension while you are living.*

An Asterisk: The Consideration

*Here’s the No Survivor Benefit catch: If your spouse is covered under your FEHB health insurance but you elect No Survivor Benefit, 31 days after your death they will be dropped from their FEHB coverage (lose their health insurance).

Even if your spouse doesn’t expect to need the money from a FERS Survivor Benefit, consider their health insurance coverage.  If your spouse wishes to continue FEHB coverage after your death, you must elect the Full Survivor Benefit or Partial Survivor Benefit.  In addition, in order to keep the FEHB coverage, your spouse must not remarry under the age of 55.

The Exception—Married Federal Employees & Retirees

If you and your spouse are each eligible for your own individual FERS or CSRS pension, it is not necessary to leave a survivor's benefit for your spouse to carry health benefits.  If you die while in a self plus one or a family plan, your FERS or CSRS spouse may continue coverage through their own federal employment or retirement benefit.

The Example

Meet Retired Roger.  He has elected a full survivor benefit for his spouse, Rosa.

If Roger passes away first, Rosa will receive 50% of Roger’s FERS pension every month for the rest of her life and she will be able to continue her coverage under FEHB health insurance—unless she remarries under age 55.

If Rosa passes away first, Roger must call OPM as soon as he can to report her death. He will then submit documentation and OPM will no longer take the 10% fee out of Roger’s FERS pension.  However, they will not credit him for the time that he was covering Rosa prior to her death.

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If you think back, you might remember that mountain of forms you signed when you were hired… Well, the same mountain of forms will await you when you retire! Need help filling out your forms?  Or just want a sneak peek at what to expect during the retirement process, with someone to walk you through each page?  Register now for Getting Your FERS Application Right online retirement training.  Click here to register now.