As retirement season approaches, many long-time federal workers are gathering documents, filling out forms, and double-checking every detail before officially stepping away from their careers. Among the most important — and often overlooked — decisions is how to structure survivor benefits.
Your pension, Thrift Savings Plan (TSP), and life insurance can all be configured to provide for loved ones after you’re gone. Making the right choices now can mean the difference between a spouse continuing to live comfortably or struggling with a sudden drop in income.
Because these choices can have lasting effects, it’s wise to talk through your options with both your partner and a qualified retirement consultant before finalizing your paperwork.
Understanding Pension Survivor Benefits
For most federal retirees, the pension is the heart of the decision-making process. The available survivor benefit options determine how much income your spouse will receive after your death — and how much of your monthly pension will be deducted to fund that protection.
Under the Federal Employees Retirement System (FERS), you generally have three main choices:
- Full Survivor Benefit: Your spouse receives 50% of your pension after your passing. This option reduces your own monthly pension by 10%.
- Partial Survivor Benefit: Your spouse receives 25% of your pension, while your own monthly payout is reduced by 5%.
- No Survivor Benefit: Your spouse receives no pension payments after you pass away.
If you choose either the reduced or no-benefit option, your spouse must give written consent. The full survivor benefit, however, can be selected without spousal approval.
Employees covered under the Civil Service Retirement System (CSRS) face similar options, though the numbers differ slightly:
- Full Survivor Benefit: Pays your spouse 55% of your pension, with a 10% reduction in your own benefit.
- Customized Benefit: You can select any percentage between $1 per month and 55%, with the cost adjusted accordingly.
- No Survivor Benefit: Your spouse receives nothing after your passing.
Again, choosing less than the maximum benefit requires spousal consent.
Here’s a critical detail many overlook: health insurance continuity. If your spouse is covered under your federal health plan, that coverage typically ends unless you elect some level of survivor benefit — even a minimal amount. For CSRS retirees, designating just $1 per month is enough to keep your spouse’s coverage intact.
This decision can be complex. Before finalizing your choice, consider the entire financial picture — your combined assets, insurance policies, outstanding debts, and whether your spouse has independent income or retirement savings. A consultation with a retirement planning professional can help you find the right balance between current income and future security.
Reviewing FEGLI and TSP Beneficiary Options
Your Federal Employees’ Group Life Insurance (FEGLI) and Thrift Savings Plan (TSP) also allow you to name beneficiaries. These designations determine who receives your benefits if you pass away, so keeping them current is essential.
Both accounts are flexible — you can name anyone you choose, and even assign percentages if you want to split the benefit among multiple people. However, life changes can make outdated designations risky. Reviewing your beneficiaries every couple of years — especially after major life events like marriage, divorce, or the birth of a child — helps prevent complications later.
The TSP process is straightforward, but FEGLI comes with important considerations. While it’s a great benefit during your working years, the cost of maintaining substantial coverage after retirement rises sharply with age. For many retirees, a private life insurance policy can provide longer-lasting and more affordable protection.
Additionally, some employees unknowingly pay for FEGLI options they no longer need. For example, those carrying Option C (Family Coverage) might be paying premiums for dependents who no longer qualify — and may even be eligible for a refund.
The Bottom Line
Selecting survivor benefits is one of the most personal and consequential parts of retirement planning. It’s about more than numbers on a page — it’s about ensuring peace of mind for the people who matter most.
Before signing your retirement papers, take the time to:
- Discuss survivor options openly with your spouse or family.
- Review your pension, TSP, and life insurance designations together.
- Reassess your needs as your circumstances evolve.
The right choices today can safeguard your family’s financial security for decades to come — and let you step into retirement knowing your legacy is protected.
