Are You Worth More Dead Than Alive?

Spousal Benefits

By Tammy Flanagan

If you are married, have you begun to evaluate the kinds of benefits under CSRS and FERS that your spouse will be eligible for if he or she lives longer than you? Providing an annuity for a surviving spouse is generally a win-win situation, and the federal government has very generous benefits in this area.

The catch is that these benefits come at the price of a reduction in your retirement annuity.. read the rest of Tammy’s excellent article here:

Survivor’s benefits. Surprising how many folks don’t like to talk about them, isn’t it. I guess most of us just labor along under the thought that we’ll be here forever and that everyone close to us will be dead and buried by the time we make our “last stand”. Truth, of course is that it is very unlikely it will happen that way and like it or not we had better be prepared. If you happen to be a federal employee then there are some features you are already entitled to that help the planning process. If you happen to be a federal employee who is getting divorced you have serious decisions to make and they have to be made right now.

First of all, like nearly everything else connected with federal retirement there are certain differences between survivor benefits for CSRS and FERS retirees. But in general the plans provide the same.

  • A lifetime annuity to your spouse (or former spouse, if qualified)
  • No up front or out of pocket expenses for the coverage, it’s paid for by before tax deduction from your annuity.
  • No requirement to qualify as may be required for health insurance and other commercial investment plans.
  • COLA (Cost Of Living Allowance) adjustment is automatic so the survivor’s income retains its purchasing power.
  • Certain other survivor benefits, such as FEHB (Federal Employee Health Benefits) coverage has to be paid from government pension sources, so at least a partial survival benefit option will be the only way to insure survivors can keep these benefits

Disadvantages are often spoken about as if they are show stoppers. to my mind I don’t think they are, but your mind is the one that counts regarding your benefits.

  • The Survivor Benefit plan costs you money. About 8 to 10% of your annuity. Nothing in life with much value comes free and this is not an exception
  • You might be able to realize more income for your survivor with a commercial investment plan. This is either true or false depending on the plan, the way you manage it and the overall success of the investments you make. If you are qualified, then press on … but here’s what I’ve found in counseling goodness knows how many retirees … they had a great sounding plan and it woulda, coulda, shoulda given them a better return … but for whatever reason they didn’t follow through. This is definitely a situation where my boyhood hero/namesake Davy Crockett was right … “be sure you’re right, then go ahead.” Just remember you are playing for high stakes against an unbeatable opponent … life.
  • The benefit to the survivor is taxable.

Well that is the high points. far too many people just brush past this important decision. Don’t be one of them.


As always remember that this site, although written by a retiree with substantial experience in the school of hard knocks, it is for personal, lay opinions and informational purposes only. If you have a legal question you should seek help from a legal professional. If you have questions involving current or future values of pensions you need an actuary or competent pension valuation expert. If your questions are tax-related, seek a competent tax advisor. In other cases, I recommend the base chaplain.

You can comment on this post, you can email me at: davestarr (at) gmail (dot) com or you can call me at: 1-719-423-8872

If you really need an accurate reading on a case involving these issues, I’d suggest you call Bill — 719-475-7529

1 Trackback / Pingback

  1. Dave Starr (davestarr) | Pearltrees

Leave a Reply

Your email address will not be published.