To protect and care for your spouse was a promise made at your wedding. Remember? This would include leaving behind, in the event of your death, income and assets to care for your spouse, especially if he/she doesn’t have their own retirement program. So, as a federal employee, what benefits are at your disposal to leave for your spouse? The Survival Benefit is but one. Available, options of 25% of your unreduced retirement annuity (pension) or 50% of your unreduced annuity. None is an option, but that is your decision. Let’s look at the benefit, as offered:
If your unreduced (before spousal survival benefit) were $4000.00 per month, a 50% spousal benefit will cost (10.00%) $400.00 per month. A 25% will be a (5.00%) cost or $200.00 per month.
Here is the flaw, suppose you take the 50% survivor benefit, enjoy retirement with the love of your life for 30 years, you have paid a grand total of $144,000.00. First, your annuity (Pension) will be restored to $4000.00 per month (colas over 30 years not considered here), so that is the good news, but what happens to the $144,000.00 you have paid out. You may apply for a refund with OPM, but you’re not going to get it. You can complain to the OIG, but it will fall on deaf ears. You can request a change of beneficiary, but there are no provisions to change the spousal benefit to anyone else, in other words, goodbye $144,000.00.
Are there other options? Yes, go private planning. At or nearly same cost. At or near or more benefits, and other benefits such as change of beneficiary and even return of all contributions may be possible, but this would be only from a private plan.
