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Pension Survivor benefits
Old 02-25-2006, 09:22 PM   #1
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Pension Survivor benefits

I've searched the boards and haven't found a discussion on survivor benefits... and advice .
My question is are the worth it?
Basicly SO is eligble to Retiring Early from fed gov with a combined* CSRS & FIRS Pension. I know we need to keep at least a partial Survivor benefit so I can always have healthcare, but some have mention we might be better off buying life insurance with the addition deduction money?* We will be able to live fairly high on the hog as they say, but I'll be just ok (and very sad) if he leaves this world early on half his pension +investments

Any thoughts
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Re: Pension Survivor benefits
Old 02-25-2006, 10:40 PM   #2
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Re: Pension Survivor benefits

Hi 5j404,

This depends completely on the individual case. If you knew when you and your spouse were going to die, you could run the numbers and figure it out. Since you don't know that, you have to deal not only with the financial side of the decision, but also with the emotional side. What will make you feel secure? A strategy that plays the financial odds but leaves you uncomfortable isn't a good strategy.

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Re: Pension Survivor benefits
Old 02-26-2006, 06:52 AM   #3
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Re: Pension Survivor benefits

Here is one thread that talked about pension options regarding survivor benefits: http://early-retirement.org/forums/i...p?topic=3463.0
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Re: Pension Survivor benefits
Old 02-26-2006, 11:14 AM   #4
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Re: Pension Survivor benefits

Thanks Martha that was just the kind of thread I was looking for.
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Re: Pension Survivor benefits
Old 02-27-2006, 12:35 PM   #5
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Re: Pension Survivor benefits

5j404 -

Don't know about FERS survivor-benefit rules since I retired under CSRS rules.* Under the CSRS rules, the retiree who chooses a full survivor benefit does so at a cost of a smige under 10%; that gives the survivor 55% of a non-survivor-benefit retiree's annuity or about 61% of the gross of one who chooses the full-survivor benefit.

When I started to plan in earnest for retirement, I looked at the 10% hit and started to look for alternatives including term, whole life insurance and annuities to cover the 55% of pension annuity.* The least costly alternative was term insurance, but, at my age of 60,* 10-20 year guaranteed term was also a pretty big cost hit and renewal costs would increase significantly.* Finally, we chose to take the 10% hit to the annuity to assure that DW would receive continuing health care and 61% of my cola'ed pension.

Best regards

JohnP
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Re: Pension Survivor benefits
Old 02-27-2006, 02:53 PM   #6
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Re: Pension Survivor benefits

I retired under CSRS and looked at the term life insurance costs versus the reduction in pension for max. survivor annuity. I couldn't find guarenteed premium term insurance that went out far enough to suit me so I opted for the max. survivor benefit. The other deciding factor was that there is a finite risk that any particular insurance company will go under or otherwise not pay off on a policy. There is little such risk that Uncle Sam will not pay the survivor benefit.

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Re: Pension Survivor benefits
Old 02-27-2006, 04:11 PM   #7
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Re: Pension Survivor benefits

We went through all the research last summer. My husband and I decided to go for an unmodified allowance. I will obtain 60% of my DH's pension if he dies. There were about five different options so it all was confusing in the beginning, but you just have to weed through all the paperwork. Good luck!
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Re: Pension Survivor benefits
Old 02-27-2006, 04:18 PM   #8
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Re: Pension Survivor benefits

Quote:
Originally Posted by grumpy
I* retired under CSRS and looked at the term life insurance costs versus the reduction in pension for max. survivor annuity.* I couldn't find guarenteed premium term insurance that went out far enough to suit me so I opted for the max. survivor benefit.* The other deciding factor was that there is a finite risk that any particular insurance company will go under or otherwise not pay off on a policy.* There is little such risk that Uncle Sam will not pay the survivor benefit.

* Grumpy
Just a follow-up on grumpy's insurance comment: there are now very competitively priced universal life policies that are "guaranteed no loapse" as long as you pay the specified premium, which can be quite low. These policies are nominally permanent life insurance but tend to build up little or no cash value and they are effectively fixed premium term policies for life (i.e. they don't expire after a fixed time period as long as you pay the no-lapse premium). Some of these policies are very attractively priced, so anyone having to make the pension decision should probably look at them. Just be aware that they will not be called a term policy.
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Re: Pension Survivor benefits
Old 02-27-2006, 06:03 PM   #9
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Re: Pension Survivor benefits

Quote:
Originally Posted by 5j404
I've searched the boards and haven't found a discussion on survivor benefits... and advice .
My question is are the worth it?
Basicly SO is eligble to Retiring Early from fed gov with a combined CSRS & FIRS Pension. I know we need to keep at least a partial Survivor benefit so I can always have healthcare,

Does the plan allow SO's the same benefit as a spouse? I am single but living with someone, I never considered if this would be an option. His job isn't government but he is in a union, I guess I have to find out, but still might not ask him since it would cost him money for me to benefit.
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