5 Things You Need to Know About Survivor Benefits as a Federal Employee or Retiree

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Key Takeaways

• Survivor benefits can provide crucial financial security for your loved ones after your passing, but understanding eligibility and payment structures is essential.

• Failing to plan ahead, including electing the right survivor benefit options, could significantly impact your spouse or dependents in the future.

Survivor benefits play a major role in ensuring your family has financial stability

after your death. As a government employee or retiree, you have access to these benefits, but knowing how they work and what choices you have is crucial. This guide breaks down the key points so you can make informed decisions about your retirement and legacy.

1. How Survivor Benefits Work Under Your Retirement System

Your survivor benefits depend on the retirement system you are covered under: the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). Each system has its own rules and payout structures.

FERS Survivor Benefits

Under FERS, survivor benefits are available to your spouse and dependents if you pass away before or after retirement. There are three main types:

• Basic Employee Death Benefit (BEDB): Your surviving spouse is entitled to a lump sum payment and a portion of your final salary. This applies if you had at least 18 months of creditable service.

• Survivor Annuity: If you had at least 10 years of creditable service, your spouse may receive a monthly annuity equal to 50% of your earned pension.

• Children’s Benefits: Eligible children may also receive a monthly annuity, which varies depending on factors like Social Security eligibility.

CSRS Survivor Benefits

CSRS retirees can elect a survivor annuity, which typically provides a spouse with 55% of the retiree’s pension. Unlike FERS, CSRS does not offer Social Security benefits, making the survivor annuity a crucial financial source for spouses.

2. The Cost of Electing a Survivor Annuity

Electing a survivor annuity reduces your retirement income but ensures financial protection for your spouse. Here’s what you need to consider:

• Under FERS, the reduction in your annuity is 10% for a full survivor annuity (50% benefit) or 5% for a partial survivor annuity (25% benefit).

• Under CSRS, the reduction is approximately 10% of your pension to provide a 55% survivor annuity.

If you decline the survivor annuity, your spouse must provide written consent. Opting out can be risky, as it may leave your spouse without long-term financial support.

3. The Effect of Remarriage and Age on Survivor Benefits

Your survivor’s eligibility and benefits can change based on their age and marital status.

• Remarriage Before Age 55: If your spouse remarries before turning 55, they may lose eligibility for the survivor annuity unless they later become single again.

• Surviving Spouses Over 55: A surviving spouse who remarries after age 55 retains full survivor benefits.

• Children’s Benefits: Dependent children typically qualify until age 18 (or 22 if still in school). If a child is disabled before age 18, they may qualify for lifetime benefits.

4. Life Insurance and Survivor Benefits – How They Work Together

Survivor annuities may not always be enough, so many government employees supplement them with life insurance. If you’re covered under the Federal Employees’ Group Life Insurance (FEGLI) program, your beneficiaries may receive a lump sum payment to help with immediate expenses.

Here’s why life insurance matters:

• Survivor annuities offer long-term financial support, but they may not cover all costs.

• Life insurance provides immediate financial assistance to cover debts, funeral costs, and other urgent needs.

• If you opt out of a survivor annuity, life insurance could be your spouse’s only source of financial protection.

5. What Happens to Survivor Benefits If You Pass Away While Still Working?

If you die while still employed by the government, your survivors may qualify for benefits based on your length of service.

• Less than 18 months of service: A refund of your retirement contributions is provided to your survivors.

• More than 18 months but less than 10 years: Your spouse may receive the Basic Employee Death Benefit (BEDB).

• More than 10 years of service: Your spouse qualifies for a survivor annuity based on your earned pension.

It’s essential to keep your beneficiary designations updated so your benefits go to the right people.

Making the Right Choice for Your Family’s Future

Understanding your survivor benefit options is critical to ensuring your loved ones are financially secure. Government employees have valuable benefits, but planning ahead is key to making the most of them. Whether you choose a full survivor annuity, supplement with life insurance, or explore other options, taking proactive steps can make all the difference.

For guidance on your survivor benefits, talk to a licensed agent listed on this website. They can help you evaluate your choices and secure the best possible outcome for your family.