Advice for those who are both nearing retirement and contemplating getting married.
I recently received the following message from a reader:
Much of retirement planning involves couples who have been together for many years. I would love to see a column for someone who is single, but is contemplating getting married near retirement age. What are the ramifications of choosing to get married a few months before retirement versus getting married shortly after? Would it make sense to speed up marriage plans if this would result in increased benefits for a future spouse?
You might be surprised at how often I get variations of this question during my preretirement seminars. Who would have thought that a significant number of federal employees are contemplating both retirement and marriage?
According to one study, among life’s most stressful events, marriage is listed at No. 7 and retirement ranks No. 10. Death of a spouse is first and divorce is second. Luckily, if you’re only retiring and getting married, your stress level is still considered in the healthy range. Just don’t add divorce in the same year.
Here are the things to consider if you marry before you retire from federal service:
Retirement: If you are married on the day of your retirement -- even if you got married only last week, your spouse would be entitled to full spousal survivor benefits. If you don’t wish to have your retirement reduced to provide these benefits, you will need the notarized consent of your spouse waiving his or her rights to them. The reduction to your retirement for this benefit is 10 percent under the Federal Employees Retirement System and a little less than 10 percent under the Civil Service Retirement System. The survivor’s annuity is equal to 50 percent of the unreduced FERS benefit and 55 percent of the unreduced CSRS benefit. The annuity is payable for the life of the surviving spouse and subject to cost-of-living adjustments before and after the annuitant’s death. Entitlement to a survivor’s annuity also makes the surviving spouse eligible to maintain federal health insurance if the annuitant was covered by self-and-family enrollment.
Health Insurance: You can change your enrollment in the Federal Employees Health Benefits Program from self only to self and family 31 days before marriage and up to 60 days after you get married. If you miss this opportunity, then you can make the change during any open season, before or after you retire.
Life Insurance: When you have a “qualifying life event” -- marriage, divorce, death of a spouse, addition of a child -- you can elect Basic, Option A, Option B or Option C Federal Employees Group Life Insurance coverage. This election must be made within 60 days of the life event. There is a six-month grace period if your human resources office determines you were unable, for reasons beyond your control, to elect or increase FEGLI coverage within the 60-day limit. Keep in mind that to maintain FEGLI in retirement, you must meet the following requirements:
- You are entitled to retire on an immediate annuity under a retirement system for civilian employees
- You have been insured for the five years of service immediately before the date your annuity starts, or for the full period(s) of service during which you were eligible to be insured if less than five years
- You have not converted to an individual policy
If you increase or enroll in FEGLI due to a life event and then retire before you’ve had the coverage for five years, you will not be eligible to continue this additional coverage in retirement.
Thrift Savings Plan: Your spouse has certain rights regarding your TSP account. Any time you request a loan or withdrawal from your TSP account:
- Your spouse must consent to your request in writing if you are a FERS employee or member of the uniformed services
- Your spouse must be notified of your request if you are a CSRS employee
Here are some things to consider if you marry after you retire from federal service:
Retirement: A retiree can elect (the spouse is not entitled to this benefit) to provide a survivor annuity for his or her new spouse within two years of their marriage date. Consider this a two-year test drive to be sure the marriage is going to work and to determine whether you want to have your retirement reduced to provide this valuable benefit for your new spouse. The reduction would take effect no earlier than nine months after the date of marriage. The retiree must agree to pay a deposit equal to the difference between the amount of annuity actually paid and the amount of annuity that would have been paid if the survivor election had been in effect continuously since the time of retirement or since the date the reduction terminated (in the case of a marriage ended through death or divorce after the employee retired), whichever is applicable. Interest is assessed against the amount owed at the rate of 6 percent, compounded annually. This deposit is paid by permanent actuarial reduction that, in most cases, is less than 5 percent of the employee's annuity. This can be a significant deposit if there is a long time between the retirement and marriage dates. It is necessary to provide at least a partial survivor annuity for a surviving spouse to be entitled to federal health insurance coverage upon the death of an annuitant who has self-and-family enrollment. Here is a link to additional information about marriage after retirement.
Health Insurance: You can change your FEHBP enrollment from self only to self and family 31 days before your marriage and up to 60 days after you get married. If you miss this opportunity, then you can make the change during any open season, before or after you retire.
Life Insurance: Retirees cannot increase their FEGLI coverage.
Thrift Savings Plan: Here is information regarding spousal rights from the TSP publication Withdrawing Your TSP Account After Leaving Federal Service.
The 1986 Federal Employees’ Retirement System Act, which created the TSP, provides certain rights to spouses of participants. The rules pertaining to these rights vary depending on whether you choose full or partial withdrawal of your account. If you are a married FERS, CSRS or uniformed services participant (even if you are separated from your spouse) you are subject to certain spouses’ rights requirements, as explained below.
With Full Withdrawals If you are a married FERS or uniformed services participant with an account balance of more than $3,500 and you are making a full withdrawal, then your spouse is entitled by law to a prescribed survivor annuity. This is the joint life annuity with a 50 percent survivor benefit, level payments and no cash refund feature. If you choose any other withdrawal option, or any combination of options, whereby your entire account balance is not used to purchase the prescribed survivor annuity, then your spouse must sign a statement on Form TSP-70 (TSP-U-70) waiving his or her right to that annuity. Your spouse’s signature must be notarized. If you are a married CSRS participant with an account balance of more than $3,500 and you are making a full withdrawal, the TSP must notify your spouse of your withdrawal election.
With Partial Withdrawals If you are a married FERS or uniformed services participant and you are making a partial withdrawal, then your spouse must give written consent to your withdrawal on Form TSP-77 (TSP-U-77), regardless of your account balance or the amount of your withdrawal. Your spouse’s signature must be notarized. If you are a married CSRS participant and you are making a partial withdrawal, the TSP must notify your spouse of your withdrawal election, regardless of your account balance or the amount of your withdrawal.
There is one more thing to remember. Any time you have a life event, remember to update your beneficiary designations, whether the event occurs before or after you have retired from federal service. Here are some important links:
Life insurance designation form: Designation of Beneficiary/Federal Employees Group Life Insurance Program.
Retirement designation forms (for any money in the retirement fund remaining upon your death and any unpaid annuity): Designation of Beneficiary/Civil Service Retirement System, Designation of Beneficiary/Federal Employees Retirement System.
Thrift Savings Plan designation form: TSP-3.
Unpaid compensation designation form:If you are employed, then you should update your beneficiary designation -- SF 1152 -- for unpaid compensation (your last paycheck, unused annual leave and any other money the agency owes you).