FER's Survivor Benefit

[Kaufmanrider]

When we retire, most of us select the FERs full survivor benefit option. This affords our spouse 50% of our FERs annuity and the right to continue FEHB benefits if we die first.

With the advent of the Affordable Care Act (referred to as Obama Care) health exchanges will be available for the uninsured. I will be young when i retire, 49 (as will be my spouse) so I was going to select the survivor benefit primarily so my wife would have affordable health benefits until Medicare age. After reaching medicare, I don't see where FEHB is really worth the cost as there are supplemental plans available, i.e., Secure Horizons, which my parents have and are happy with. Maybe I am wrong? Retirees on medicare chime in.

I can get a $500,000 life insurance through WAEPA for less than a third of the amount that will be taken from my retirement monthly for age 50-54 and it will still be less than half of the amount when I am age 55-59. Of course that might change over time, but I think it would still be less than the 10% reduction from my FERs. At age 60 the max life insurance I can purchase would be $200,000. But at this age my wife would have my TSP and our assets (small inheritance, house, etc) so she wouldn't need the life insurance. Doing basic calculations, the cash she would receive from an insurance policy would provide her larger monthly payments than my FER's annuity through either annuity payments or just about the same taking interest payments assuming 4%. And I believe she would be entitled to a Social Security survivor benefit if I died?

Most of us keep the survivor benefit to provide health care to our survivor. Is it worth it? Will the cost, and benefits provided by FEHB be that much better than health care under ACA?

What do you think? Pros and Cons. Especially some of you already retired. I am submitting my retirement paperwork next week and I am just not sure what to do?

Thank,

 

[Rustynutt]

Unless I'm in error, you still have a year after retirement to adjust the survivor benefit (and FEGLI).
Being the financial irresponsible person I am, we agreed to 50% survivor benefit, but kept Life at no-reduction. My one year anniversary is coming soon, and will have to revisit those elections. No reduction on Life is killing our take home, and the intention was to obtain a life policy outside to make up the difference for the 50% survivor benefit. I'm not the sharpest tack in the box, and waiting until 57 to obtain life is somewhat costly. I didn't understand term and full life clearly, so was surprised to discover I'd be paying quite a bit for term life, only to have it end long before I plan on going (of course have no say in that matter). No-reduction is costing about $250/mo, figured it to be a safe guard the first year if too much excitement got the best of me. Will admit, haven't looked into other SS supplement services to weigh the benefit of dropping FEHB down the road. I'd like to see Uncle Sam pay the "difference" they are supposedly making up in providing FEHB, now that WOULD be a benefit one be happy with exiting Federal Service.

On another note, my exit date was January 31, 2013. My pay was finalized, with SS offset pay in about six weeks. I exited on a VERA VISP (29 years 9 months lucked out), and was told my retirement package was routed differently than regular retirement submissions.

 

[Talan150]

I think you have touched upon a couple of the many delimas of retirement. Only two issues would scare me. The high cost of life insurance for people 70 or more and the life span of the ACA. Congrads on retiring so young. That must feel great. I just turned 50 and will probably go around 56...eerr...retire from work that is.. Present plan is to take the 50% survivors and FEHB. However I have some time to see what happens to the ACA once congress gets a little redder.