Married Fed’s with Fed Spouses Have More SSB Options
By: Kevin O’Leary
As a married Federal employee, choosing retirement benefits can mean more than just simply deciding on how to receive long-term income. It can also refer to how your survivor will be able to go on should you pass away.
In deciding how your spouse will be able continue paying his or her ongoing living expenses, there are a number of different options that you can choose from – starting with how much of your own retirement income you estimate that your survivor will need going forward.
Other considerations include other assets or pensions your spouse has as well as life insurance death benefits available to your spouse after you die.
Determining a Survivor Annuity Amount
Participants in the FERS retirement system have several options when it comes to continuing their pension income for their survivors. The plan allows for one of three choices – including full, partial, or no amount of continued pension income.
If the “full” survivor option is chosen for your survivor, it means that he or she will be able to continue receiving 50 percent of your regular monthly pension amount once you have passed away.
Should you opt for this pension continuation feature for your survivor, there is a “cost” of 10 percent of your monthly pension income, deducted regularly throughout the remainder of your life.
If you should alternatively choose for your survivor to receive a reduced amount of your pension once you pass away, this means that he or she will start receiving 25 percent of your monthly pension income amount following your death.
As with the full pension, there is also a cost for this option. The reduced survivor pension option cost is a deduction of 5 percent of your monthly pension income each month throughout your lifetime.
The CSRS options are more flexible regarding the percentage of your pension you can leave to your spouse and the maximum is higher at 55%.
Choosing No Survivor Benefit Option
In some cases, the “no survivor benefit” option will be chosen. While all cases and situations are different, it is extremely important to consider all angles prior to making this particular choice. One factor to keep in mind here is that, by going with no survivor annuity income benefit, your survivor will also be ineligible for FEHB health insurance benefits following your death as well.
However, If your spouse is also a Federal Employee and chooses no SSB on your retirement papers he or she could continue FEHB on his or her own record if you die first in most cases. You could do the same for your spouse’s retirement papers and substantially increase the total household retirement income without concern over the surviving spouses access to the FEHB. This might be a good option if the couple already has substantial assets or life insurance that would be available to the surviving spouse.
Should you make any of the choices above and then have second thoughts about the options that were decided upon, you will have a 12 month “window” of time following the date of your retirement in order to make changes to the choices on your survivor annuity benefits. However, once this time period has elapsed, you will be unable to make any type of revisions to your plan other than if you get married or divorced, or if your survivor passes away.
More about Kevin O’Leary
Kevin O’Leary is a Federal retirement expert who works out of his Southern California office, but helps federal employee clients throughout the country. Kevin O’Leary is a regular contributor to PSRetirement.com and Kevin O’Leary is highly sought after speaker and advisor on federal retirement benefits.
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