Federal Couples

By Tammy Flanagan

July 7, 2006

Are you a federal employee who is married to another fed? If so, you've got some unique issues to deal with in planning for retirement. They mostly revolve around two fundamental questions: As with other issues regarding federal benefits, the answers to these questions depend on your individual situation.

The Civil Service Retirement Spouse Equity Act of 1984 contains several key provisions that affect federally employed couples. Under the act:

Let's take a look at some of the questions that arise as a result of these provisions. Survivor Benefits
If a federal couple retires, is it necessary to leave each other a survivor's benefit, since each will be entitled to their own retirement?
The answer to this question is based on financial need. The simple question to ask is this: "If I die and my retirement stops, will this cause a financial hardship for my spouse?" If your spouse is able to pay the bills and maintain the household without the benefit of your survivor's benefit, then it is not as important as it would be for a spouse who is financially dependent on the CSRS or FERS annuity. Age difference and health of each spouse may be considered, but since the actual date of death is unpredictable with any degree of certainty, financial planning should be done by looking at the worst-case scenario.

The survivor's annuity is payable for the life of the surviving spouse and is adjusted annually for inflation. These two features make it an extremely valuable benefit in the event the spouse outlives the retiree by a lot of years. If your spouse dies before you, you may elect to have your full annuity restored to the amount payable without the election of survivor's benefits.

If you are being encouraged to purchase life insurance instead of electing a survivor's annuity, consider the source of the encouragement. Be sure you are getting an unbiased opinion from someone who will not have a financial gain if you purchase the insurance policy.

If I die after retiring from CSRS (I am already at retirement age but still working), will my wife's surviving benefits be reduced? She receives Social Security benefits because she retired as a FERS employee. She is also receiving partial payments (for 4 hours each day) from workers' compensation.
If you elect a reduced CSRS retirement to provide your wife a survivor's annuity, this will not reduce her other entitlements. Electing a survivor's benefit is almost like buying insurance. You pay for the benefit by having your retirement reduced. She would be entitled to 55 percent of your CSRS retirement if you elect maximum survivor's benefits.

If a CSRS employee dies before retirement, survivor's benefits are payable to the surviving spouse in the same way that they are if elected at retirement. The benefit would be computed based on the amount of service and the high-three of the employee at the time of death. A CSRS spousal survivor annuity is payable as long as the employee had a minimum of 18 months of service. The surviving spouse must have been married to the employee for at least nine months at time of death, or have a child born of the marriage. If the death was accidental, the length of marriage requirement is deemed satisfied.

Under FERS, the situation is different. FERS is a three-tiered retirement system, and survivor benefits may be payable from all three of its tiers:

By Tammy Flanagan

July 7, 2006