What Happens to Your Benefits If You Die After You Retire?

By on December 4, 2008 in News, Retirement

Note: A new version of this article with more current information is available at http://www.fedsmith.com/2016/03/17/what-happens-to-your-benefits-if-you-die-after-you-retire-2/

This is a follow-up article to several recent articles on the topic of federal employee benefits. The earlier articles are: What Happens to Your Federal Employee Benefits if You Die While Still Working?, Leaving Government Before Retirement? What Happens To Your Benefits?, and If You Die Before You Retire, What Happens to Your Benefits? A Response to Readers’ Questions.

This article considers the question: What happens to your benefits if you die after you retire?

Your spouse will be able to keep your health insurance if two conditions are met. First, you must have elected a survivor annuity. Second, your spouse must be enrolled with you on a self and family policy on the date of your death. If these conditions are met, you spouse will be able to continue your health insurance and Uncle will continue to pay his share.

Your life insurance will be paid to your designated beneficiary. If the amount of your insurance is $5,000 or greater, your beneficiary will not receive a check. Rather, they will receive a money market account and a checkbook for the account.

Speaking of beneficiary forms, do you know who your beneficiaries are? If you have any doubt, you may wish to check your Official Personnel Folder (OPF). The last thing you want is having your ex-spouse walking off with all you have saved over your career.

If you elected survivor benefits for your spouse at the time of retirement (or at the time of marriage, if after retirement) your spouse will begin collecting a survivor benefit after your death.

Under CSRS, survivor benefits can be as much as 55% of your annuity. You may elect lesser amounts, but spousal consent is required at the time.

Under FERS, survivor benefits can be either 50% or 25% of you annuity. Spousal consent is required for the 24% survivor benefit.

COLAs are paid on survivor benefits for CSRS and FERS. If your spouse remarries before the age of 55 they forfeit their survivor benefit.

If you did not elect a survivor benefit, your designated beneficiary is entitled to a refund of any of your contributions that have not been paid to you. OPM views you as recouping your contributions dollar-for-dollar beginning at retirement, so if you die more than a few years after retirement, there will be nothing to recoup.

Your TSP will go to your designated beneficiary. Your beneficiary may either take the money all at once (paying all the deferred taxes at once) or spread it out over his/her lifetime (paying all the deferred taxes a little bit at a time). If your spouse is a federal employee/retiree, they may combine your TSP account with their own.

John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.

© 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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  1. Good2Know says:

    thanks I learned somehing…. and that’s good.

  2. Geraf says:

    Under FERS, survivor benefits can be either 50% or 25% of you annuity. Spousal consent is required for the 24% survivor benefit.
    The two errors in this sentence should be corrected:  “you annuity” and “24%”.

  3. Kevin Campbell says:

    I thought there was a length of time requirement for Health Insurance to be inheirited, but you only mention the Survivor Annuity and enrollment at time of death as the two contitions that must be met.  Did the rules change or was I misinformed?

  4. FERSretired says:

    Spousal consent is also required for no election of a survivor benefit.

  5. Sharon says:

    I’ve suggested before that someone needs to take up the issue of beneficiary designation, other than a spouse.  In many cases, a large percentage of retirees are divorced and may have never remarried (as in my case).  I don’t know why a provision isn’t made in the law for our annuity to be paid to any of our children (probably the ones still unmarried) upon our death.  They are just as entitled to it, in my opinion, as a spouse.  It should be our decision to designate a beneficiary for survivor benefits.  Single divorced or never married retirees should have this option. Being married should not be the criterion for choosing a beneficiary; everyone should have the same right to designate. Our child or children may have cared for us financially and emotionally and they are just entitled to these benefits, maybe more so in fact, than a surviviing spouse.

    • FERSretired says:

      “Survivor benefit” & “Designated beneficiary” can be two different things.  Only a spouse(or former spouse if divorced) can be a Survivor eligible for an annuity.  Your children can be a Designated beneficiary entitled to a refund of “your” contributions if you have no spouse or if your divorce decree doesn’t force you to make your spouse the designated beneficiary.  Under FERS “your” contributions don’t add up to much since “your” contributions were only .08 percent of your salary.  As an example a 25 year career under FERS might add up to about $12,000.  CSRS contributions would be close to ten times that amount since they contribute a much larger portion of their pay toward retirement.  Any contributions under CSRS or FERS that don’t get paid out will stay in the collective money pot unless congress figures out a way to spend it like they did the Social Security pot.  If you “could” designate a child as a survivor then it would drain the CSRS/FERS pension money pot prematurely and leave all the other CSRS/FERS pensioners and spouse survivors in the cold.  Since in most cases children are 20 years younger than their parents they would likely pull COLA checks for far longer than a pensioner or spouse based on life expectancy tables.  I believe under FERS there are even extra cost involved in electing a spouse survivor who is more than 10 years younger than the pensioner for this same reason.  I understand your point about children caring for you financially/emotionally but as you can see there is a bigger picture to take into account.

    • GraspingATstraws says:

      According to a previous FedSmith article Should You Elect a Survivor Benefit for Your Spouse?
      By John Grobe
      Thursday, January 14, 2010
      “Under both CSRS and FERS there is an option called an Insurable Interest Survivor Annuity that allows a retiree to choose a survivor annuity for someone who has a reasonable expectation of financial benefit from the continued life of the retiree. An insurable interest survivor annuity is a full survivor annuity; there is no less than full option. In addition, the cost of the annuity is based on the difference in age between the annuitant and the individual with the insurable interest. The lowest cost is 10% of the full and unreduced annuity for someone who is older, the same age or less than five years younger than the annuitant. The highest cost is 40% of the full and unreduced annuity for someone who is 30 or more years younger than the annuitant. 
      In order to have an insurable interest annuity approved, the retiree must be in good health and must not be retiring on disability….. “

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