Survivor Benefits & Smart Retirement Planning for Federal Employees

11.14.25: Audio automatically transcribed by Sonix

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

Speaker1:
Hello. Welcome back to the federal retirement show. I'm your host, Val Majewski with American Benefits Exchange. And as always, really appreciate you taking the time out of your busy schedule to join us to view our content. That's what it's here for. It's for you, the federal employee that's looking for accurate information when it comes to their benefits and retirement situations. And we have a whole library full of content. I encourage you, if you like this episode or like something that you hear, go back and view our library. So many different things that we've covered over the years. We have over 150 episodes, uh, full of of comments and questions and information that we wanted to give out to you so you can make the best decisions and navigate through your career and ultimately end up retiring how you want, when you want, with the lifestyle that you want. A couple other things I'd highly recommend. If you view the content and you like it, you can search our library. Number two, share it with a colleague. Share it with somebody that you work with because we want to get the word out. We want more federal employees to have access to this information. So if you like it, not only get notified about a new episode, subscribe to the podcast, but notify or refer a friend if you will. Tell a colleague that they need to also view the federal retirement show and learn this information.

Speaker1:
Because again, that's what it's here for. It's for you, the federal employee. Today's conversation, today's topic, if you can see it here is saying is 50% enough. What I mean by that is, is 50% of your pension enough for your survivor, for your spouse? This stems from a recent conversation that I've had with a federal employee thinking about retiring in the near future. Maybe not tomorrow, but in the near future, and going over the survivor benefit options that they have within the government. And when we went through the benefits and the retirement report and all of the things we laid out, all the numbers and we're talking to, well, how is this going to benefit the spouse? Because ultimately that's a concern for a lot of federal employees. It may not be for you, but it might be for you. Not only what are you going to be making in retirement, but what happens if something happens to you first? What is your spouse going to get going forward? And we went over a number of things. How does Social Security work for your spouse? What happens with your TSP when you pass or if something happens to you first, what does your spouse get? But then when it came down to the pension and the options that the federal government gives you as a retiree for your spouse, there were some additional questions. So just to quickly review, what does the government allow you to choose from when you retire and you're filling out your paperwork, you will choose one of these three options when it comes to survivor benefits.

Speaker1:
As a Fers employee, you can choose not to leave a survivor benefit at all. What does this mean? This means you're going to get the maximum pension allowed. There's not going to be any reduction for the survivor benefit, but if something happens to you first, nothing carries on to your spouse. Okay, so this is full pension, maximum pension, no reductions. But when something happens to you first, if that occurs then nothing carries over to a spouse. The second option is a full survivor benefit. Okay. So you can either leave nothing which is no survivor benefits. The next one is the full survivor benefit. And what is the maximum that you can leave your spouse as a Fers employee? That is 50% of your pension 50%. So if something happens to you first, your spouse will continue your pension, but at 50% of the amount. When I first got taught this, uh, market, if you will, the federal benefits and retirement market. Um, the person that trained me said, you know, the government is telling you that one person can live on half as much as two. And is that true for you? That's what the title of this is. Is 50% enough for your spouse in the event that you pass away first. So that's the maximum that you can leave.

Speaker1:
Now what is the I guess, penalty if you will? I shouldn't say penalty, but what's the cost for doing that? Because there is a reduction to your pension if you choose the maximum amount. So if you go full 50% for your spouse, well your pension gets reduced by 10%. So that is the cost. Your pension gets reduced by 10% if you choose the 50% option. Now there's an in between. So I said there's three options right. There's no benefits. There's the maximum which is 50%. Then there's the minimum which is 25%. So you can say if something happens to you first, your spouse can continue your pension at 25%, not 50, at 25% of the amount. Now this will reduce your pension 5%. So to review real quick, you can leave nothing to your spouse. It's a full pension, no reductions. You can leave the maximum, which is 50%. So something happens to you. They will continue at 50%, but that's going to cost you or reduce your pension by 10%. The last one the minimum you can leave 25%. And that will reduce your pension now by 5%. So understand what those options are and what the government gives you. Now there's a reason why people will choose one or the other first. The biggest reason that I see is federal employees say I want to leave my spouse as much as possible because they're going to need that income if something happens to me first.

Speaker1:
So they're saying, I don't care what the cost is. I don't care what the reduction is. Um, I just need to leave the most because I need to make sure that my spouse has the most amount of income if something happens to me first. That's a a common thing that I hear. The other thing, uh, the other reason why people choose a survivor benefit is because of the health insurance implications. And we've gone over this in previous episodes, but I'm going to touch on it really quickly. What the government says is that in retirement, if you want to ensure that your spouse can continue your health insurance, if you pass away first, then you need to at least elect a minimal survivor benefit. So let's say you chose the first option. I discussed no survivor benefits whatsoever. Okay. Full pension. If you retire and you have your spouse on your health plan while you're alive. When you choose this option, there's no survivor benefit option while you're alive. Both of you can enjoy your health insurance. Great. But if you were to pass away first, your spouse will not only get zero of your pension, but they will not be able to continue your health insurance. So in order for them to continue your health insurance or have the option to do so, you need to at least elect the minimum 25% survivor benefit. Okay. So that's the other reason why I see federal employees choose a survivor benefit option is the health insurance implication.

Speaker1:
They want to ensure 100% that their spouse can continue the health insurance if they predecease their spouse in retirement. So that's kind of the brief overview of the survivor benefits your options. And you can choose which one is right for you. But then the question is the government says the maximum that you can leave is 50%. Is that going to be enough? Is 50% enough? As I mentioned earlier, the government saying one person can live on half as much as two. I have found that in practice, when I talk to federal employees, that that's not going to be enough. I've talked to a lot of federal employees and their spouses as this person or these people will, near retirement. And the common consensus is I want more than 50% from the spouse. I can't live on just half as much. We're going to need more. So what do you do then? If the government says you can only leave a maximum of 50%? What do you do in that case? And this is where this conversation with a federal employee came up recently. This federal employee is going to retire in the near future within the next couple of years. Is thinking, I want to make sure that my spouse is going to have enough income in the event that I pass away first in retirement.

Speaker1:
How do I ensure that we went over the options? 50% is the most and the conversation turned to how do I get more? 50% is not going to be enough. And that's what the spouse is saying as well. 50% is is not going to cut it. It's not going to be enough in retirement. Now, what happens with the rest of the income? Where does that come from? Now granted, this person should or the spouse should get some Social Security, but it's not both, right. So if both, uh, people in a marriage worked right, the federal employee and the spouse both working, they're both entitled to some sort of Social Security. If the federal employee died first, the spouse is going to continue with the greater of the two. Social Security's not both, the greater of the two. And let's say they were on equal playing field. Well, yes. Now they're only going to get 50% of the Social Security TSP. They will get the remainder of TSP. And however they set that up maybe that was paying some some income in retirement. There may not be a reduction of that income when the federal employee passes away first in retirement. But you're going to get half the pension the greater of the two Social Security's. This is at the most. And maybe whatever the TSP is. So how do you ensure how do you give to your spouse more than 50%? Well, you have to supplement it outside of the government.

Speaker1:
You have to look at other plans, other options, which the government does not teach you about, unfortunately, that are available for you to leave more than the 50% option to your spouse. And we have this discussion all the time with federal employees because this is about retirement income planning, but also succession planning and making sure that your loved ones that live beyond you if you happen to pass away first. Again, this is a big what if. But if you happen to pass away first, how are they going to continue on? You want to ensure that their lifestyle is not only great with you in it, but it's also going to continue to be great if you happen to predecease them. Now, I'm not trying to be morbid here and and kill anybody off, right? And just say, hey, you're going to die. That's not the case. But what if that happens? We plan for the what ifs. We plan for all these contingencies. And your your family will love the fact that you've done this. So how do you do it? Well, there are plans that are out there. Um, companies that specialize in working with federal government employees that you can set up, where you can 100% ensure that if you pass away first, that not only will your spouse get a piece from the survivor benefit option, whether it's the 50% or the 25%, maybe it could be only the 25% so they can continue.

Speaker1:
The spouse can continue the health benefits and you can supplement the rest. And what number will your spouse need? We're saying the government says 50% is the max. What if it's 60, 70, 80%? What if you want full 100%? You can do that. You can supplement the rest, and you can set up this plan. Now granted. Yes. Nothing's free. You've got to pay for this. But. And it may not be the the 10% cost. The 5% cost for whatever you're trying to leave and you're going to get more. In my opinion, you're going to get a lot more value, more bang for your dollar by setting up with a customized individual plan outside the government. Then you're going to with just the survivor benefit plan. And there's a lot more flexibility and options and things that are available that I'm not necessarily going to go over in this episode. If that's something that you want to discuss individually and you're saying this is screaming exactly to my situation, I've been talking to my spouse about it, and we were concerned about only only getting 50% if I passed away first. I didn't know there was another way to get more. Exactly. That's why we're having this conversation, because another federal employee that I recently talked to was going through the exact same thing. And I figured, yes, this is going to help other federal employees out there.

Speaker1:
They had a similar question. I'm sure there are others, thousands out there that probably have this conversation with their spouse and wondering, what do we do? How do we leave more income? How do we allow for you to live the same lifestyle or a lifestyle that you desire to live? If I were to pass away first as a federal employee. So if this is a concern of yours, yes, go to our website, Federal Retirement Show.com. Fill out the form one of our experts across the country. If it's not me personally, we'll be reaching out. And you can specifically ask them, hey, I have a question about the survivor benefits and leaving more than 50%. I watched this episode of the Federal Retirement show and it talked about is 50% enough? And for us, it is not going to be enough. For us, 50% is just scratching the surface. We want 70, 80, 90. I want to leave my spouse 100% of my pension if I were to pass away first, and you can do that. You just have to set up the plan in order to do so. And then again, our plans out there with companies that specifically specialize in federal employee benefits and retirement, that you can set this up and allow for your spouse to get more income. This is a customizable, so there is no real limit. You just have to see if it's cost effective for you and it fits within your budget.

Speaker1:
But I cannot stress this enough that you need to discover what's out there. If this is a question that you have right, you can't just say, well, let's just stick with 50%. There's no other options. It is what it is. If you're having this discussion and you want to leave more than 50%, get a review done and just see all the options that are out there, because you can eliminate you can say, nah, that's not for us. But if you just say, I don't want to know about it, then that's a problem, right? That's one of the problems that I see with, with in talking to federal employees and retirees or doing individual benefit reviews and, and workshops and trainings, um, is, you know, it's either a lack of information because the government doesn't give it. It's a it's a sense of, you know, too much confidence in the government system. Right. Uh, just they they never learn these things, or the government never taught it to you. So you figured if they wanted us to learn about it, they would have taught us. I've seen that a false sense of security that occurs. Thing. I work for the government. I'm going to have all the benefits that I need. You need to see what's out there. And this is just one specific topic when it comes to the survivor benefits and the options. But you need to know all of the variables, all of the plans that that you can possibly set up for yourself to ensure that you're going to have that that solid retirement, you're going to be 100% secure in the fact that when you retire, everything's set up.

Speaker1:
It's all good. I have no, you know, kind of areas that I did not, uh, provide for my spouse or my family or I didn't research. I'm 100% certain and confident in everything that I have set up for retirement. We can review all of that. That's what's great. So these conversations that I have with federal employees, just like you, you know, I want to share with you all. And that's been the nature of the show recently. It's just going over the conversations that I'm having with federal employees and the topics that come up, the questions, the concerns, you know, talking to the spouses and what's available, what's not available. You need to know all the variables. And it's very important. If you've never gotten an individual benefits and retirement review done. I know we're talking specifically about survivor benefits today, but if you've never gotten a full, comprehensive view, an overlook of your benefits and retirement situation, I believe you're missing out. In fact, it's one of the top ten mistakes that I see federal employees make. I wrote a pamphlet years ago called The Top ten Mistakes That Federal Employees Make, and that's one of them.

Speaker1:
It's probably the biggest one is never getting an individual benefits and retirement review done, talking to an expert and going over the situation, their specific situation. Because if you go through with that false sense of security that you've got everything figured out already, there's no need. The government has taught me everything that I need to know. Then I'm going to tell you you're going to be disappointed when it comes to retirement and everything that's given to you in the end, and the options that you have and the things you didn't plan for. So again, specifically today, talking about survivor benefits, if that's you, if you're saying, I really want to look at the options, I want to leave my spouse more than 50% because 50% is not going to be enough for us. Schedule some time to meet with us. Let go over all of the options that are available to you, and just see if it's if it's good for you and your family and you can make the best decision. You know, now all the variables if you want to get a full benefits and retirement review done, also continue. Go to our website, Federal retirement Show.com fill out the form. Like I said, one of our experts will be in touch to schedule time and go over everything with you. You probably asked to. I get this question what is this going to cost me? What's this going to run? It doesn't cost you anything.

Speaker1:
The review is complimentary. Our our representatives out there across the country will not charge you a penny to review your benefits. Answer your questions, all of that. We just want to provide this information, this guidance to federal employees just like you. So I really appreciate, like I said at the beginning, of you taking the time out to view this, there's a reason you clicked on this video. Maybe this topic is is hitting home with you and you really know and think that, hey, 50% is not going to be enough for me and my spouse when it comes to my benefits and retirement. Love to talk to you and look forward to to hearing all the scenarios and seeing how we can navigate that and customize some plans that are right for you, your family, your situation. As I mentioned earlier. Again, go back and view all of our content. It's there for you. I'm sure that there is a title of an episode that resonates with you. There's a topic that we've discussed in the past and revisited maybe a couple times that's really going to hit home. So we put out a lot of information for you guys so you can navigate your career and make the right decisions, and sure that you are set up properly along through your career. And as you enter retirement. Again, my name is Val Majewski. You've been watching the federal retirement show, and I look forward to seeing you on a future episode.

Speaker2:
Everyone pictures retirement a little bit differently. For some, it's peaceful mornings and coffee at sunrise. For others, it's finally exploring what comes next. But no matter the vision, the time to start planning for retirement is now. I'm Jim Terrebonne here for the Retirement Radio network powered by Amara Life. Retirement doesn't just happen. It's built one small step at a time. The first big hurdle saving the right amount of money. Nbc senior business correspondent Christine Romans.

Speaker3:
Time is your superpower. The longer you are saving for retirement, the better.

Speaker2:
Christine and financial experts alike all say there are a few key steps that can make all the difference. First, start saving now.

Speaker3:
Let me give you an example. You put $10,000 into a retirement account over 30 years with compound interest of 5%. That becomes $40,000. Imagine doing that every single year over all of your earning years. That's how you really use time to your benefit.

Speaker2:
Second, take advantage of your employer's retirement plan. If your company offers a 401 K with matching contributions, sign up and contribute enough to get the full match. It's one of the easiest ways to build your nest egg. Third, balance your investments. A healthy mix of riskier investments like stocks or mutual funds, coupled with safer options like bonds or annuities, can help. Whether the market's uncertainty, especially as you get closer to retirement. Fourth. Know what you'll need. The US Department of Labor suggests planning for 70 to 90% of your current income to maintain your lifestyle. Social security helps, but it likely won't cover it all. And finally, seek professional guidance. A qualified financial advisor can help tailor a strategy to meet all of your goals so your savings last as long as you do. Remember, retirement isn't just a finish line, it's a new chapter, one that finally feels a lot better when you've planned for it for the Retirement Radio network powered by Amara Life. I'm Jim.

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