FERS Survivor Benefits: The Election You Make Once

Most of the decisions in a federal retirement can be revisited. You can change your TSP withdrawals, switch health plans at Open Season, adjust your tax withholding. The survivor benefit election is different. You make it at retirement, there's a short window to change your mind, and after that it's largely fixed for the rest of your life.

What you're choosing

If you're married when you retire under FERS, you choose whether a portion of your pension continues to your spouse after your death. In outline, the choices are:

• A full survivor benefit. Your spouse would receive 50% of your unreduced pension for life. In exchange, your own monthly pension is reduced by 10% for as long as you both live.
• A partial survivor benefit. Your spouse would receive 25% of your unreduced pension. Your own pension is reduced by 5%.
• No survivor benefit. Your pension isn't reduced, and nothing continues to your spouse when you die.

Those percentages are set by law rather than by circumstance, which is why we're comfortable printing them. What they mean in dollars depends entirely on your pension, so for your actual figures use OPM's estimates or your agency's retirement counsellor.

Your spouse has a say

The full survivor benefit is the default for a married employee. To choose a partial benefit or none, your spouse generally has to consent in writing, and that consent is typically notarised. This isn't a formality. It exists because the decision moves real money from one person's future to another's, and both people should understand what they're agreeing to.

The connection people miss: health coverage

Here's the part that rarely comes up at the kitchen table. If your spouse is covered under your FEHB enrolment and you die, your spouse can generally continue that FEHB coverage only if they're entitled to a survivor benefit from your pension.

Choosing no survivor benefit to keep a slightly larger monthly check can, in practice, mean a surviving spouse loses access to FEHB at exactly the moment they're least able to replace it. That's why some couples elect at least a partial benefit even when they don't need the income: the survivor payment is, among other things, the key that keeps health coverage in place. Check OPM's rules for how this applies to your situation; it's too important to take from a blog.

How to think about the trade

There's no universally right answer, but there are good questions:

• What would your spouse live on? Add up what they'd have without you: their own pension or Social Security, any survivor Social Security, savings, and what's left in your TSP. If that number is thin, the survivor benefit is doing important work.
• Who is likely to outlive whom? Health and age gaps matter. A survivor benefit is worth more the longer a spouse is likely to live after you.
• Does your spouse have their own health coverage for life? If not, re-read the section above.
• What does the reduction cost you each month? It's a real cost, paid every month for as long as you both live. Put it into your gap arithmetic rather than treating it as a footnote.

Some couples look at replacing the survivor benefit with life insurance instead. That can work in some cases and fail badly in others, and the health coverage point above is one reason why. If anyone suggests it, ask how the surviving spouse keeps FEHB under that plan, and how they get paid if you take their suggestion.

If life changes after retirement

The election isn't entirely frozen. If your marriage ends or your spouse dies, you can generally ask OPM to stop the reduction. If you marry after retirement, there's a limited window to elect a survivor benefit for your new spouse. The deadlines matter, so if any of this applies to you, check OPM's current rules promptly rather than waiting.

Where to go from here

OPM publishes the rules and the forms, and your agency's retirement counsellor can produce estimates under each choice. Once you know what the election costs, carry that number into the FERS pension gap. The order of all these decisions is laid out in The TSP Secure Path.