Return to Article: 'Survivor:' Federal Edition
-
21082
I too would like to see a comparison of husband and wife both CSRS, both retiring within 6 months of each other, both with 35 years of service at the GS-14 level and each having their own health insurance. The 10 % for both retirements looks like it would total around 1,400 a month, seems like a lot of money to give up.
-
20930
I would like to see the comparison for the FERS Survior Benefits. My husband is on Medicare, but will have no supplemental insurance if something happens to me when I retire.
-
20698
Frankly, I feel comfortable with the way I will have my annuity set up when I retire under CSRS. My wife and I have several investments which are doing great, I have my TSP for mad-money, and a multitude of employment opportunities that will pay good enough for me to bank my retirement.
My greatest joy will be when I turn in my retirement package, hang the mistletoe on the back of my pants, and bid farewell to this calamity called ICE.
-
20690
Great article that reinforces what I've always believed. Furthermore, I think the angle that often is overlooked is who will manage this "massive" dump of insurance money your "grieving" widow will inherit? There have been so many stories of people being ripped off by the very financial advisors they trust and I am extremely reluctant to leave my spouse in that vulnerable position. I don't care how much preparation you've made to take care of your spouse upon your demise, once you're gone it is out of your hands and there are many unscrupulous scoundrels left behind who will attempt to persuade your widow that your plans for her are "inadequate." Who needs that head(heart)ache?
-
20660
This was the best comparison I have seen to help make the decision. I would like you to take it one step further for those of us who are CSRS and married to a CSRS employees. Given that only one of us could collect if we opted for full spousal benefits, we would like to weigh the benefit of no spousal benefits and keeping the 10% to spend versus the full benefits. That is assuming that we could live on our own retirement annuity, TSP account, and inherited TSP account.
-
20623
To answer the question about remarriage after retirement and providing a survivor's benefit and health insurance, the answer is "yes." If a retiree marries -- or as they say in the regulations, "acquires a spouse" -- he or she can elect a reduced retirement to provide a survivor annuity for his or her new spouse. This can be done anytime within two years of the date of marriage. For a CSRS retiree, the minimum benefit is 55 percent of $1 up to 55 percent of the retirement. The minimum is a technicality that will provide a surviving "non federal" spouse the right to be covered by FEHB (as long as the retiree was covered under self and family coverage on the date of death). Under FERS, a partial survivor annuity is 25 percent of the FERS basic benefit instead of 50 percent.
-
20622
Yes! Thank you all for your comments... you get it! I was afraid that the column might come off sounding like I thought insurance was a better deal than the survivor annuity - I do not! As far as an annuity to replace the survivor benefit, the same logic applies. Annuities have very high commissions for the agent selling them. Beware of the motivation of the seller and the cost and benefit over the long term. One other thing to remember is that the "cost" of the survivor annuity reduction also reduces the income you will be reporting to Uncle Sam after you retire. This significantly reduces the "cost" of providing this valuable benefit for your spouse.
-
20614
Another consideration is that the reduction for survivor annuity constitutes non-taxable income. For instance, if your pension is $50,000, it is simply reduced to a pension of $45,000. You are taxed on the $45,000 only. If you went for a term insurance or other policy on the outside, you would receive and be taxed on the entire $50,000, and have to pay the additional $5,000 for private arrangements with after-tax money.
-
20613
Thanks for another excellent column. As always, everything really depends upon personal circumstances and finances, but I looked into this recently and wanted to share what I found. I was advised by professional financial advisors that the government's survivor benefits are excellent and that in my case I should take advantage of them. For the relatively low deduction to the retirees annuity (less than 10 percent for the full survivor benefit) the survivor gets 55 percent of the full retirement benefit with annual cost of living adjustments for as long as they live. There is flexibility as well, as you can opt for less than the full survivor benefit with a smaller reduction to the retiree's annuity if that works for your situation. As you pointed out, if the "survivor" dies first, the retiree's benefit is no longer reduced going forward. If you have concerns about providing for your survivor in the event you die first, this is hard to beat. I personally did not find term insurance to be as affordable or reliable when trying to insure a comparable financial benefit for my spouse.
-
20606
Tammy Flanagan's article addressing survivor benefits was, as always, informative and well written.
I agree that choosing a spousal annuity is much like buying life insurance. Indeed, premiums paid for life insurance policies primarily serve to provide peace of mind to the insured, as the insured will reap no other direct benefit from the policy.
However, unless other solid income producing assets are available, choosing a survivor annuity is preferable to purchasing life insurance as: 1) the survivor cannot be swindled or cheated out of the federal annuity; 2) the annuity is backed by the full faith and credit of the U.S. government, and 3) we are all living longer lives; even if you purchase a 40-year term life policy, are you willing to take a chance that your spouse may be left with inadequate resources should you live longer than anticipated?
As a GS-14 under CSRS, a 10 percent reduction of income to provide 55 percent of my retirement benefit to my spouse may be viewed as a hefty fee, but nonetheless a reasonable one. The bottom line for me is that my decision is dependent upon an honest answer to a simple question: what is my level of concern for the well-being of my spouse after I die?
-
20597
I found the article on Survivor's Annuity very interesting as it is another important decision that every retiree must make. In the table comparing the two hypothetical retiree's elections, I took it one step further adding Bill's decreased annuity to provide added survivors versus George's term life payments over the years. The results were that George paid $8,515 more over the same period. While no definite conclusions can be made because of all the variables, I see the survivor's annuity as another benefit of federal service.
-
20593
My fiance and I are both federal employees. We each carry our own health insurance and will continue under the single option after getting married as it is less expensive than family. We also have each other as the beneficiary for our CSRS retirement fund. After we marry, can we keep the beneficiary designation as is so the surviving spouse would inherit the amount left in the account or will we be required to elect or waive the spousal annuity? Also, would inheriting the remainder of the CSRS retirement money be better (more cost effective) than receiving a spousal annuity?
-
20590
Employees should carefully consider the survivor benefit, but I do not think you adequately conveyed the requirement that a surviving spouse can only continue the federal health insurance if there is a survivor benefit payable. For many people this is a more important factor than the money.
-
20588
A question left somewhat unanswered by the column is whether federal government survivor annuities are a good financial deal, when compared to commercially available annuities. In other words, are these programs the equivalent of the gold-standard TSP, a mismanaged rip-off, or somewhere in between?
-
20585
Tammy,
I would like you to discuss survivor benefits when both the husband and wife are federally employed, and the wife is eligible to retire five years prior to the husband, with both in the CSRS system.
Thank you.
-
20580
I am a widower retiring Feb. 3, 2007. A retirement seminar I attended said that if I were to marry again after retirement, I could extend my health insurance to my new wife. Further, to protect her right to be insured, I would only need to deem $1 of my pension to her, minimizing the impact on my pension to $1 plus the cost to change from single to married. The woman I am dating has sufficient funds and does not need to worry about paying the retiree/employee share of the health premiums, but will have no health insurance once she leaves work until she turns 65 for Medicare.
PROMO RIGHT: EVENTS
UPCOMING WEBINARS
NOVEMBER 18
Speed bumps for Teleworking: What are they and how to avoid them?
DECEMBER 3
Achieve Program Success: Unlock the Management Information in Your Data
DECEMBER 10
Practical Transparency: Applying Exchange Networks for Mission Results
PROMO RIGHT: DIRECTORIES
Post a Comment
To post a comment, you must provide a name and a valid e-mail address. Messages must be limited to 400 words. By using this Service you agree not to post material that is obscene, harassing, defamatory, or otherwise objectionable. Although Government Executive does not monitor comments posted to this site (and has no obligation to), it reserves the right to delete, edit, or move any material that it deems to be in violation of this rule.