Most of us worry about our children when they’re young; specifically, what would happen to them, if you pass away prematurely? However, as the kids grow older, most of us worry about them less and less. Your spouse might be another story. The two of you are a team, both financially and in other ways, and without you they might struggle to cover the household bills or live comfortably in retirement.
The Surviving Spouse Benefit is aimed at this concern. As the two of you move into retirement together, it makes sense to analyze your pension as compared with your overall cost of living. If something happens to you, can your spouse survive without the income from your pension? The Surviving Spouse Benefit would replace a portion of your income, in the event that you pass away and your pension payments end.
Similar to life insurance, you will pay a premium if you elect the Surviving Spouse Benefit. Unlike many types of life insurance, however, you are not subject to medical qualifications. Therefore, the Surviving Spouse Benefit might be a good option for those in poor health, who otherwise have trouble obtaining a life insurance policy.
If you’re in good health, though, you might get a better “deal” through life insurance. We can’t guarantee that, of course, because so many factors are calculated before arriving at life insurance premiums.
How much is the Surviving Spouse Benefit? CSRS employees could provide surviving spouses with any amount of income, ranging from one dollar per month up to 55 percent of their original pensions. Premiums for the maximum benefit fall just under 10 percent of your annuity payments each month, and are adjusted each year along with COLA.
For FERS employees, options for Surviving Spouse Benefits are more limited. You can provide your spouse with either 25 percent of your pension (for a premium of 5 percent), or 50 percent (for a premium of 10 percent).
Along with the monthly income, your spouse could also continue to participate in the Federal Employee Health Benefits program.
There are distinct advantages and disadvantages to the Surviving Spouse Benefit, and you should call us to analyze your situation in further detail before making a decision. We can help you compare the benefit to other comparable forms of protection for your spouse, and decide how to proceed.
