Bedrock Investment Advisors understands your benefits and can help you with your goals.

Survivor Benefits for Federal Employees: Here’s What You Need to Know to Keep Your Family Safe

Lauren Maddox
November 26, 2024

Key Takeaways

Federal survivor benefits can provide crucial financial support for your loved ones. Understanding these benefits is key to ensuring they receive what they’re entitled to.
You have options! With various choices for survivor benefits, learning the basics helps you customize your plan to meet your family’s needs.

Understanding Survivor Benefits for Federal Employees

When it comes to securing your family’s future, federal survivor benefits can be a vital resource. Federal employees often put in decades of dedicated service, and in return, the government provides an array of benefits to ensure financial security

for your loved ones in the event of your passing. While thinking about the end of life can be tough, setting up these benefits will give you peace of mind knowing your family is safe. Let’s break down what’s available, how these benefits work, and what decisions you’ll need to make.

Survivor Benefits Under FERS and CSRS

Federal employees may be covered under two primary retirement systems: the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). Survivor benefits for each differ, so it’s essential to understand which system you’re under.

FERS Survivor Benefits

For those of you under FERS, your survivors may be eligible for three types of benefits:

Monthly Survivor Annuity: The basic monthly annuity is one of the most important benefits offered under FERS. If your spouse qualifies, they’ll receive 50% of your annuity.
One-Time Death Benefit: If you’ve served at least 18 months, your spouse may qualify for a one-time lump sum equal to your annual base pay or a standard amount (whichever is greater).
Children’s Annuity: Minor or dependent children may receive an annuity under certain circumstances.

CSRS Survivor Benefits

CSRS employees have slightly different survivor benefit options:

Monthly Survivor Annuity: Your spouse may receive a monthly benefit of up to 55% of your annuity if you chose this option.
No Lump-Sum Death Benefit: CSRS does not include a one-time death benefit, so planning for any immediate expenses is essential.
Children’s Annuity: CSRS also provides annuities for minor or dependent children, though rates may vary.

Planning for Your Family’s Financial Stability

Preparing for the unexpected means more than simply checking a box—it involves selecting the right options. Survivor benefits impact your take-home retirement pay, so you’ll want to strike a balance between what you need now and what your family will need later.

Choosing Your Survivor Benefit Amount

For both FERS and CSRS, you’ll have to choose how much of your retirement annuity to leave as a survivor benefit. Options usually include:

Full Survivor Annuity: Opting for the full benefit will provide the maximum allowable annuity for your spouse, though it will reduce your own retirement income. For FERS employees, this is 50% of your annuity, while for CSRS, it’s 55%.
Partial Survivor Annuity: This option provides a smaller monthly benefit to your spouse but also results in a smaller reduction to your retirement income. For FERS, this is generally 25%, and for CSRS, it’s a set percentage.
No Survivor Benefit: If you have other financial plans in place, you can opt for no survivor benefit, which allows you to receive your full annuity amount. However, this option means your spouse would receive no monthly income from your federal pension if you pass away.

Consider Costs and Coverage Duration

Survivor benefits have costs. Opting for a full annuity will take a larger percentage of your retirement income than partial or no benefits, so calculating the long-term impact is essential. Furthermore, survivor benefits last as long as your spouse is alive, so this choice can provide long-term stability for your loved one.

Children’s Benefits and Eligibility

If you have children, survivor benefits can be essential to their support if something happens to you. Under both FERS and CSRS, a child may qualify for an annuity if they are:

Under age 18 (or 22 if they’re a full-time student)
Disabled and dependent on you for income

Each child receives a set amount per month, though this amount varies and may be affected by Social Security benefits they receive. If you have multiple children, these amounts may be divided among them, depending on total benefits available. Planning for your children’s care through these benefits can provide much-needed security for their future.

Survivor Benefits and Health Insurance: FEHB Continuation

Your spouse or dependents may be able to continue their health insurance through the Federal Employees Health Benefits (FEHB) program if they receive a survivor annuity. To make this possible, you must choose a survivor benefit at retirement. This continuation of health benefits can be invaluable, especially if your family relies on FEHB coverage and would otherwise face high insurance costs.

If you opt for a survivor annuity, your spouse and eligible dependents can keep FEHB coverage for as long as they receive the annuity, providing them access to health insurance when they may need it most. This coverage can also be a key factor in deciding whether to choose a full or partial survivor annuity.

Making Changes to Survivor Benefits

After your retirement date, changing survivor benefit elections is challenging, so it’s crucial to make an informed decision from the start. Under certain conditions, though, adjustments are possible:

Divorce: If you divorce after retirement, you can cancel your spouse’s survivor benefits. However, a court order might require you to continue these benefits.
Death of a Spouse: If your spouse dies before you, survivor benefits will automatically cancel, and you’ll see an increase in your monthly annuity.

Being informed about these details can prevent surprises later and help you better plan for various scenarios.

Understanding Tax Implications

Federal survivor benefits are generally considered taxable income. It’s worth consulting a tax advisor to understand the tax impact for your family members. Withholding options are available to make tax obligations easier to manage, especially if your loved ones would prefer not to owe large amounts during tax season.

Steps to Set Up and Review Your Benefits

Now that you understand your options, here’s a step-by-step guide to setting up your benefits.

Review and Decide on Benefit Amounts: Choosing a full or partial survivor annuity is the most crucial step, balancing your needs with those of your loved ones.
Document Beneficiaries: Update your official beneficiary forms and keep copies.
Establish Other Sources of Support: If you opt for no survivor benefits, make sure other plans are in place to care for your family.
Consult HR and Financial Advisors: Make sure you have a clear picture of how these benefits work and their impact on your finances.
Regularly Review Benefits: Life circumstances change, so review your benefits periodically to ensure they still meet your family’s needs.

Secure Your Family’s Future with Informed Choices

Survivor benefits offer more than financial help—they give you and your family peace of mind. Planning now ensures your spouse or dependents have the resources they need and access to vital health benefits if you’re no longer there. This security is one of the most valuable gifts you can provide your loved ones, making the investment of time and thoughtful decision-making worthwhile.