Understanding Your Survivor Benefits as a Federal Employee
The retirement annuities under CSRS and FERS have a survivor benefit option that can provide your spouse with an annuity after your death.
Your spouse’s survivor annuity can be up to 55% of your full retirement annuity if you are a CSRS employee, or up to 50% for employees under FERS.
Your spouse’s initial survivor annuity will include any COLA increases already received on your retirement and will continue to receive future COLA increases.
Based on the Spouse Equity Act of 1986, if you select anything other than the maximum survivor benefit, your spouse must consent before a notary or someone who is authorized to take oaths.
The maximum survivor annuity reduces your full retirement annuity amount by approximately 10% under both federal retirement systems. Reducing the survivor benefit payout will increase your retirement annuity.
Under CSRS, with spousal consent, the survivor annuity can be eliminated or reduced to as low as 1% of your full annuity. A court order can also affect the amount a spouse receives under CSRS.
Under FERS, if the survivor annuity is not eliminated, it can only be 50% or 25% of your full annuity unless there is a court order giving a portion to a former spouse.
Under both systems, if you decide to eliminate the survivor annuity, your spouse will not be covered under your FEHB (federal employee health benefits).
CSRS vs FERS
Under CSRS, for your spouse to qualify for the survivor benefit, one of the following must have occurred:
- You must have completed at least 18 months of creditable federal service and died subject to CSRS deductions from your paycheck.
- Your spouse must have been married to you for at least 9 months at the time of your death.
- You must have a child born before, during or after the marriage.
- Your cause of death must be defined as accidental under FEGLI.
Some things to note under FERS:
- You must have completed 10 years of creditable service and died while subject to FERS deductions. If you are a former employee, you must have at least 5 years of federal service covered by deductions or deposits.
- If you select the survivor annuity but your spouse dies before you, your full, unreduced annuity amount will be restored. However, you will not be reimbursed for any previous reductions.
- If you die and your spouse remarries before they turn 55, their survivor annuity will cease unless they were married to you for at least 30 years or the second marriage ends due to death, annulment, or divorce and they pay back any lump sum received at the termination.
- In the event that you die and your spouse remarries, it is possible that they may be able to collect two survivor annuities at once. This can only happen if your spouse remarries over the age of 55, and if they marry another federal worker who is not yet retired. If your spouse is under 55 or marries a federal employee who is already retired, they will have to choose between the two annuity options.
There are many other circumstances and complications that can go along with this, depending on your individual situation. For example, the process can become much more difficult if either marriage ends in divorce, due to divorce decrees and court orders that may be involved.
Best Choice for You
Factors often cited are the health and life expectancy of the spouse, the need for a higher annuity at retirement, or wanting to use the additional annuity amount to purchase a life insurance policy or other investment vehicles to take care of your family when you die.
To consider all of your options and their associated risks, you may want to speak with a certified financial planner about your federal employee retirement and benefits.
For over 30 years, federal employee retirement planning has been a key focus of Medallion Financial Group. We recognize that FERS retirement benefits have extra layers of complexity, such as the Thrift Savings Plan (TSP), 401K, Pension plan, FEGLI and more. It’s easy to get lost in a sea of bad advice when so few people understand the basics. We help with the basics and beyond to enable our clients to get the education and advice they need to retire with confidence.
Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.
We strive to exceed client’s expectations – because we have high expectations of ourselves.