Death While Actively Employed

4.11.25: Audio automatically transcribed by Sonix

4.11.25: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome back to the federal retirement Show. I'm your host, Val Majewski with American Benefits Exchange. I really appreciate you taking the time out of your busy schedule to join us and view our content. The purpose of this show, if you're new, is to provide you, the federal employee, with just accurate, honest information when it comes to your benefits and retirement situations so you can navigate through all the things that we believe you need to know so you can make the best decisions, the best choices, and set yourself up properly as you go through your working career and plan towards retirement. Now, as we do from time to time, um, you know, we we take questions from folks or people will submit questions via our website, which is Federal Retirement Show.com. By the way, if you go there and you have a question or you need some information, you can fill out the form. We can reach out to you. Somebody, uh, one of our representatives across the country. If it's not me personally, we'll be reaching out to go over your benefits retirement situation. Answer any of your questions. But we recently got a question from a federal employee that asked about, you know, what happens if I pass away while I'm working? And we've touched on this before in previous episodes, but really haven't spent a ton of time. And the answer is not super complicated, but I just want to go in a little bit deeper and look at this situation.

Speaker1:
So again, the question came in. It said, what if as a Fers employee, because most of you out there are fers, if your CSRs I apologize, reach out to us separately. We can go over that part. But for for Fers employees, what happens if you pass away if you die while still actively employed? Now, a lot of people have seen our episodes where we talk about survivor benefits in retirement, and that's going to be different because this is what happens if the retiree passes away. First. You chose a survivor benefit option when you filled out your retirement paperwork, and now that just plays out right. Your spouse will get whatever it is that you decided that he or she will get. Going forward, if you die first in retirement. But let's say you hadn't gotten that far yet, right? What happens if you pass away first? Uh, but while working, while actively employed? So let's dive into today's topic again of what happens to a first employee if you die while actively employed. So a couple of things here, right? And we're talking about death. Well, actually I'm going to keep reiterating this. Why. Because it's different than when you're retired. And there's a couple extra things in here that we're going to talk about. So first of all, um, in order for there to be a death benefit paid out. Now I'm going to back up a second before I get into the the content.

Speaker1:
There's a couple other things that your your survivors, right, your spouse or beneficiaries will get, uh, that I'm not going to mention today because what I want to talk about this is the fers death benefit. But what else would your beneficiary or Beneficiaries get and they would get whatever your phegley is, right? Federal employee group, life insurance, whatever was active at the time of death, they'll have to file a claim for that. Now, this is important because I said file a claim. Uh, OPM and Office of Phegley. They don't just send out a check when you pass away. Right. There's got to be a claim filed for your phegley benefits. And unlike maybe any outside life insurance policies you have, which I'll get into in a second. You don't have, uh, policy documents for phegley. So you beneficiary, if they don't know you have it, they may not know that they have to file a claim for it. So I would highly recommend have a copy of a claim form handy with a sticky note on there or some kind of instruction saying, hey, I have this and you can stick it with your important documents. Uh, talk to your beneficiary or beneficiaries about your phegley that way they know if something happened to you that they're going to have to file a claim, but at worst case, a claim form with a sticky note saying, I have this file, this claim in the event something happened to me, and they'll get whatever you're phegley is.

Speaker1:
There's a Social Security death benefit. It's very small, but there's a Social Security lump sum death benefit. Then there's the outside life insurance policies that you may or may not have. Your beneficiary or beneficiaries would file claims for those as well. So those are the things we're talking about. Life insurance. Something happens to you whether you're actively employed or retired. Your beneficiary beneficiaries are going to file claims for those things outside life insurance policies, social security, small death benefit. But just understand these are these are things that your your beneficiary is going to get in the event that you pass away. And we're specifically again talking about actively employed. So what happens from Fers. What happens from the federal government. What are the things that your beneficiary in this case a spouse would be entitled to if you passed away while actively working? First of all, you have to have at least 18 months of credible service. 18 months of credible service as a first employee to qualify for some sort of death benefit for your spouse to get the benefit, you've had to have been married for at least nine months prior to death. So 18 months service? Nine months, uh, at least married. Then the first thing that you would get or that your spouse would get, sorry, you wouldn't get it.

Speaker1:
Because in this case, we're talking about what happens if you pass away while actively employed. Uh, first thing your spouse would get would be the basic employee death benefit from Fers basic employee death benefit. Then, uh, assuming that you had at least ten years of service, there could be a survivor benefit that goes beyond that. Now the first thing, then basic employee death benefit. What is that? What is it? Uh, it's essentially 50%, 50% of your final salary. Okay. So whatever your final salary is 50% of that. Or if you happen to be one of those people who had a higher high three than their final salary, then they'll use the high three. But let's say it's your final salary plus a certain amount, and that amount has steadily increased over the years. Currently it's $42,607.52 on top of 50% of your final salary. So that is the first basic employee death benefit, right? Basic employee death benefit from Fers, something that your spouse would be entitled to if again, have 18 months of service and been married at least nine months prior to death. The second thing is the survivor benefits. Now, I mentioned earlier, for retirees, you are choosing survivor benefits when you're filling out your retirement paperwork. For those that are actively employed, you have not chosen a survivor benefit yet, but a survivor benefit will be granted to your surviving spouse if you have at least ten years of service.

Speaker1:
So if you have at least ten years of service at the time of death, your spouse will be entitled to 50% of the unreduced pension. Now, what does that mean? The Unreduced pension is assuming that you were able at the time of death, you were able to retire with full benefits, no reductions, whatever, um, based on age or years of service or lack thereof. They will just calculate a full pension based upon your high three, based upon your years of service at the time of death, and your spouse will be entitled to 50% of that going forward. So there's the basic employee death benefit, 50% of the salary, plus 42,607in change that they're going to be giving to the spouse. And if you have at least ten years of service, then the survivor benefit 50% of the unreduced pension calculation based on, you know, the years of service and the high three at the time of death. So this is in addition to what I mentioned before, which was your phegley and other life insurances you have, plus the very small social security death benefit that they can give you. So understand, if you pass away while working, yes, your spouse will be entitled to something. So the question came from a federal employee, and the question was a concern that if they died before being eligible for retirement, that their spouse wouldn't get anything as far as an income.

Speaker1:
Right, because they hadn't yet chosen a survivor benefit. Um, they hadn't yet retired. So how can the spouse get a retirement survivor benefit? Right. And I just want to I clarified it for this better employee, but I wanted to bring it up because others probably have this concern and have this question of what will my spouse get if I pass away while actively employed. So hopefully this information was valuable to you. I don't want anything to happen to anybody out there while you're working. I certainly want you to live long and happy into retirement before something happens. But just understand that if you did pass while working, that something will be provided to your spouse, and potentially if you have at least ten years, the survivor benefits going forward 50% of what your pension would have been at the time of at the time of death. So as always, I mean, I appreciate you tuning in. I want you to. To, like, subscribe. Get notified wherever you're watching these podcasts, wherever you're watching these episodes, whether it's on our website, YouTube, Spotify, SoundCloud, Apple Podcasts, you'll be notified when new content comes out and share this with others. You know, there's others that you work with that can use this information that needs some guidance. This is a great starting point, and if they want to review their personal situation and take a deeper dive, yeah, reach out to us.

Speaker1:
You can go to our website again, Federal Retirement Show. Fill out the form and somebody will be in touch to do a full benefits and retirement evaluation. Oh by the way, I didn't mention it before. If you do that at the completion of your evaluation, you get a free copy of my book. There's No Excuse Your Guide to Maximizing your Federal Employee Benefits. It's a nice little reference piece. People have given me great compliments on it. It's a very simple read, and I try to keep it as easy to understand as possible when it comes to benefits of retirement, but it is a nice little reference piece for you to go back if you ever have questions when it comes to benefits and retirement. So thank you again. Appreciate you taking the time out of your busy schedule to view our content, and look forward to seeing you on a future episode. Are you worried about outliving your retirement savings? Nationwide's peak ten fixed indexed annuity is designed to help you feel secure and confident. With Nationwide Peak ten, you will receive protection for your principal, keeping it safe from market downturns, growth opportunities tied to market indexes but not invested directly in the market. Guaranteed lifetime income and protection for your loved ones with spousal income options and death benefit. Call us now at (512) 582-6050. To connect with an advisor and learn how peak ten can help you retire with confidence.

Speaker2:
Guarantees and protections referenced are subject to the claims paying ability of Nationwide Life and annuity insurance company. Nationwide, PETN is issued by Nationwide Life and Annuity Insurance Company, Columbus, Ohio. Neither nationwide nor its other entities are associated or affiliated with American Benefits Exchange.

Speaker3:
Its Matt McClure here. And, you know, a lot of those New Year's resolutions now that springtime has sprung, a lot of those New Year's resolutions that we made beginning of the year, especially regarding our finances, well, those have gone by the wayside. And now, though, it's a good time, as you're, you know, cleaning out your junk drawer, your physical junk drawer, let's clean out that financial junk drawer as well. Do a little spring cleaning for your finances kind of re-up on those. Recommit to those New Year's resolutions that we made back when. Well, now is a good time to do that as well, because it is America Saves Week, which is focused on saving and encouraging people to save, giving people resources to save their money. Well, right now I am speaking with Robin growly. She is head of consumer deposits at Bank of America, and she's also kind of their savings and budgeting guru there. Robin, how are you?

Speaker4:
Wonderful. How are you today?

Speaker3:
Wonderful. I really appreciate your time. I think that a lot of times people think of saving as this sort of big, overwhelming task, but it doesn't necessarily have to be that right.

Speaker4:
Oh, you're absolutely right. I mean, we hear that from many of our customers. They have such great intentions and they really want to save. But getting started becomes a barrier because they think about they've got to save this big number. Right. And we always say, you know, don't be overwhelmed by it. Right. Let's take that bigger goal that you have and break it down into smaller short term goals. And you know, maybe if you want to save $1,000 in six months or whatever it is, take. And let's start by saving. Put away $10 a week. And once you have that shorter term goal set and you're starting to make progress, that really helps you build momentum. And then savings becomes a habit.

Speaker3:
Yeah, absolutely. And I think one of the things that I at least have found in my life that has helped me, um, start to save and and even invest some, um, as well, but especially on the saving front is just kind of automation, you know, sort of like using technology to kind of do it for me. And then I don't have to think about it. Is that something that you encourage folks to do?

Speaker4:
Absolutely. The more that you can automate as it relates to savings, the better you're going to be. I always like to say find those tools where you can set it and forget it. So at Bank of America, we have our Keep the Change tool, which automatically rounds up your debit card purchases to the nearest dollar, and then it transfers the change from your checking account to your savings account. So that happens behind the scenes. You don't, you know, need to take action. You don't need to put it on your to do list every day. It's automatic. And again, you can kind of set that and forget it. And it helps build your savings.

Speaker3:
Great. Set it and forget it I love that. And then what are maybe some other common kind of pitfalls that people fall into. You know, we talked about kind of just being overwhelmed sort of overall by the goal, the overall goal of saving more, or maybe having this huge number in their head and just sort of being discouraged by the whole thing. We talked about that. We talked about the automation part of it and just sort of getting it off your plate. But what are maybe some other sort of common pitfalls that maybe people get started that they get tripped up with and their saving journey?

Speaker4:
Yeah, yeah. You know, one of the things we see quite often is that folks keep dipping into their savings. And the reason that's happening is quite often we'll have, you know, our customers have their checking account and they're starting to keep their savings within their checking account. Right? So as they're out there and they have, you know, maybe their grocery bills a little bit more than what they expected to spend. Well, it's pretty easy. It's all in the same account just to use what your savings, you know, to use your savings to pay. That. And what we encourage instead is set up that separate savings account. That way your funds are going to a dedicated place for your your larger goal, right. And with that, as you start to keep your funds in that separate account, you're able to see them grow. And then again, that builds momentum. It makes you feel good, it makes you feel motivated. And then also I say, if you're saving for, you know, your goal with that account, call it something that's meaningful, right? So if you're going on a vacation this summer, that's what you're saving for. Name it vacation 2025. That's where it will make you kind of stop and think twice before withdrawing funds from that account.

Speaker3:
Yeah, keep everything, you know, labeled and organized in that way. I think that that's very helpful as well. I love a good label on on things. Uh, you know, physically and kind of, you know, virtually where my, where my money is, too. Um, so that's great. And then, you know, I mean, also, I feel like a big thing for a lot of people today. I mean, we've seen the stats over the past couple of years especially, you know, showing that people are in a lot of consumer debt here lately. And, you know, trying to get out of debt is a big goal as well for a lot of people. But how do you sort of balance that, you know, the paying down your debt with also putting some in savings?

Speaker4:
Yeah, absolutely. Well, the good news is that you can do both, right. And, you know, everyone is in a different kind of financial position. But in general, I always like to use the 50, 30, 20 rule where 50% of your income goes towards necessities. So think about rent, utilities, debt payment 30% goes towards your wants. These are things that make our life more comfortable, right? Like buying the latte, going out to dinner with your friends, and then 20% goes to saving. So that gives you some general guidelines to ensure that as you look at your inflows and outflows, you're kind of budgeting within those parameters. And now certainly as life changes, we might have to flex it a little bit. But always make sure that you have, you know, the 20% dedicated to your savings. And within that 50% is you're paying down your debt. Make sure that you're making that minimum monthly payment on your debt.

Speaker3:
Yeah, that's definitely very important there. Um, well, Robin, just about time for us to start wrapping up here anyway. But anything else that you wanted to touch on that we haven't mentioned just yet that comes to mind?

Speaker4:
Yeah, I would just say, you know, this is America Saves Week, where we are focused on saving for your past, present and future. And certainly as your listeners need more tips and tools, they can visit America saves.

Speaker3:
America saves. Org. Easy enough. Robin growly with Bank of America. Thank you so much. Always appreciate talking to you and thankful for your time.

Speaker4:
Thank you. Take care.

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