Electing a Survivor Benefit
If you’re married and about to retire, you need to decide on whether you’re going to elect for your spouse to receive a survivor benefit.
If you choose to do so, the amount of the annuity you receive will be reduced. This reduction amount will be based on the size of your annuity, whether you have a reduced annuity or full annuity.
An employee of the Civil Service Retirement System can elect for the survivor benefit to be a minimum of $1 annually or up to 55% of what their base annuity is. If you were to die first and your spouse wants to continue getting coverage from the Federal Employees Health Benefits program, then a survivor benefit must be elected first. That is why someone might want to take the minimum amount for the survivor benefit just to get into the program.
If you are an employee of the Federal Employees Retirement System, the benefit can either be 25% of your base annuity or 50%.
A CSRS employee with a full survivor benefit will see about a 10% reduction in their annuity. A FERS employee will have an approximate deduction of 10%. If you’re under CSRS, it will be cheaper for you to have a survivor annuity that is reduced. How much less is determined by the election amount. If it’s under FERS, the option of 25% will mean there is a 5% annuity reduction. This gets taken from the base annuity. As you probably know, the annuity is how much money you have coming to you before anything gets deducted from it for things like taxes or healthcare benefits.
It is good to choose a survivor annuity because your spouse will have income for the rest of their life after you’re deceased. However, if the spouse is under 55 and they remarry, then their survivor annuity ends.
The money from the base annuity that you have is what will be paying for your spouse’s survivor annuity income. The survivor annuity will grow from all the future cost-of-living allowances that are received.
You might think it would be better to invest your money in an insurance policy rather than a survivor annuity, but that isn’t the wisest choice. The government offers you a much better deal for your spouse than an insurance company would.
If you have a former spouse that is receiving a survivor annuity and you now have a new spouse, a survivor annuity can still be elected for them. However, they could only receive the benefits if your former spouse becomes unqualified to continue receiving them, like if they remarry and they’re under 55.