By Mike Miles
Survivor benefit vs. life insurance
May 9th, 2013 | Uncategorized
Q. I will be retiring at the end of this year with 37 years and 10 months of service. I am a CSRS employee and will be 57 years old in September. My annual annuity would be $81,958. I will have a little over $200,000 in my Thrift Savings Plan account.
Is it smartest to take the spousal annuity or take out a life insurance policy on myself to sustain my wife once I pass away? My annual annuity will be reduced by around $7,900 a year if I chose the spousal annuity. Which would be the wisest?
A. This isn’t your choice to make. It’s your spouse’s choice. If I were your spouse, I’d favor the full survivor benefit.
Tags: annuity, CSRS, life insurance, retirement, survivor benefit
Take Social Security or TSP?
April 22nd, 2013 | Uncategorized
Q. I’m retiring June 1. I’m 62 and will be 63 in September. I’m in CSRS Offset with 36 years and five months. Accrued sick leave will give me 37 years and six months. I’d like to hold off on taking Social Security. I might work when the dust settles in retirement. I have 35 years of covered Social Security earnings, so no windfall elimination provision reduction, just the CSRS Offset.
Would it be wiser to take an annual 4 percent draw from the Thrift Savings Plan, wait until I’m 66 and then take Social Security? I have $205,000 in TSP. Interest rates might increase as well, and then decide on an annuity.
I receive a survivor annuity from my wife’s CSRS record. I’m getting married two weeks before I retire. My spouse will have a nonfederal pension and Social Security when she retires. She will also be the recipient of my survivor benefit in CSRS.
A. You’re asking for individual financial planning, which can’t be provided responsibly through a forum like this. The answer to your question depends upon your goals, resources and constraints, and will require some analysis to determine.
Tags: CSRS, retirement, sick leave, Social Security, survivor benefit, TSP, windfall elimination provision
Annuity vs. life insurance
December 3rd, 2012 | Uncategorized
Q. My husband and I are both retiring soon, he under FERS and me under CSRS. His income will be made up mostly of Social Security, while mine will be mostly CSRS. A full annuity for him would cost $425 a month. Does it make sense to elect this annuity given the cost? Would a term life insurance policy be a better alternative? I need to put the paperwork in this week.
A. There is no universal answer to this question, but if in doubt, the safe bet is to elect the full survivor benefit for your spouse. To answer this question properly would take a full-blown financial analysis, but you’ve waited too long for that to happen before your deadline, so you’ll have to “spin the wheel.”
Tags: annuity, CSRS, FERS, income, life insurance, retirement, Social Security, survivor benefit
Insurable interest survivor benefit
April 11th, 2012 | Uncategorized
Q. As I read the information in the retirement pamphlets, it states that “a blood or adopted relative closer than first cousins (this includes children, siblings and a parent) are presumed to have an insurable interest.” If I retire in good health, could I elect an insurable interest survivor benefit for my adult son or daughter (blood relatives) even though they are not my dependent or disabled?
A. Yes.
Tags: interest, retirement, survivor benefit
Life insurance vs. survivor benefit
May 5th, 2010 | Uncategorized
Q: A co-worker is trying to convince me that taking an annuity without survivor benefit is more cost-effective than with the survivor benefit. He says it is better to take the full benefit and buy an insurance policy to protect my wife when I die. Besides the health insurance aspect of that decision, I argue that the survivor benefit is the better choice. I believe you wrote an article on why it is better to take the survivor annuity. Would you please repeat that advice and would you also point to where I may find more information on this question?
A: Better for who? Better for your life insurance agent, definitely. And you can probably enjoy a little more spending cash while you’re alive, but I doubt that, with the proper understanding, your spouse would choose this option. You can visit http://www.variplan.com, click on the link to “Who We Are,” then click on the “Archive” link at the top. Type “pension max” into the search window and you’ll find several pieces I have written on the topic.
Tags: life insurance, survivor benefit