For most of us, years of hard work and a long career aren’t just about our own personal fulfillment. We’re doing it to provide for our loved ones. While our kids tend to grow up, move away, and pursue their own careers, we hope to enjoy the rest of our lives with our spouses.
But what happens if you pass away sooner than expected? What would happen to your spouse, financially speaking? And what happens to your federal employee retirement benefits?
Timing will impact the exact outcome, but here’s what we know: In most cases, the surviving spouse of a CSRS employee can receive 55 percent of their deceased spouse’s pension. The calculation is based upon the pension amount you would have received, so the exact amount varies from one worker to the next.
Aside from receiving part of your pension, your spouse will be able to draw spousal benefits from your Social Security record, once he or she reaches retirement age. Of course, if their own benefit is larger then it would make more sense to claim that one.
If your spouse is named as the beneficiary for your Thrift Savings Account, any funds accumulated in that account will pass to him or her. However, in the case of a premature death, it’s unlikely that you would have accumulated as much retirement savings as you had hoped. Your spouse also faces (potentially) a very long life ahead of them.
You could estimate your spouse’s theoretical financial situation, in the event of your death, by calculating the expected pension payment, and then adding TSP withdrawals and Social Security benefits once your spouse reaches retirement age. We can help you with these calculations.
In many situations, this income will not sound adequate. That’s why many federal employees will also elect to participate in a life insurance plan, with a lump sum death benefit payable to their spouse. Meet with us to perform a needs analysis, so that we can help you determine how much life insurance is adequate to meet your needs.
