Dual Fed employee, same age, retiring at same time, relatively same high-3 (pensions would be 8-9K per month each). Other hypothetical accounts below… 2x $1.5M TSP $800K-$1M Brokerage $300-400K Roth No debt at all Could this be a case for electing no SBP?
Spouse 1 income = FERS 4k SS 3k Spouse 2 income = FERS 4k SS 3k At death you keep only 1 of the SS benefit. In this scenario, 14k of income drops to 7k (hypothetical) because you lost FERS and SS. As you'd expect, I'd recommend that you schedule an Intro Call with us and go through the initial planning process before making your decision. If your numbers above are rooted in truth, we're in a strong position to add value to your financial plan.
I’ve been through a lot of seminars but no one touched on what you said about spouse dying first. Except video, I’m retired military, I didn’t get the survivor plan but that was because i’m also a federal employee. I will definitely be opting into full survivor plan at retirement . The benefit is too great. You earned a new subscriber.
I appreciate this. I have been debating what to do. My wife's family history indicates she should go first...but there is no guarantee. We looked into a large term insurance policy, but it was more expensive for me than to pay SBP. Your comment about not being ready to retire if you cannot afford the cost was powerful. The cost really is a drop in the bucket for us with our investments and pensions. Thanks for the sage advice.
@joedessenberger2048 Thank you so much for this comment! It's not easy producing the videos and podcast but comments like this help continue to motivate us to share what we do at Mason and Associates. I'm glad this was helpful. When are you retiring??
You found a topic that is difficult to navigate and not well understood and lacking almost any RUclips content. Thanks for the video. I’d love to see more content on the topic. From my experience if you talk to an insurance salesman they’ll definitely show the superiority of life insurance. However a guaranteed benefit is valuable and you explained that perspective of electing the full survivor benefit. Federal HR seminars seem to stay far away from this topic.
Thank you! We have a few podcast episodes on this topic as well and worked really hard to help retired military elect SBP during the open season last year.
Thanks for watching. Although you don't have a spouse, please share this video with friends, family and co-workers so they don't make the mistake of declining survivor benefits at retirement.
At 1:31 - as another data point, if you work in the University of California system, your pension is inflation adjusted based on the CPI of the (SF Bay Area + Los Angeles area) / 2. The adjustment is between 0 to 6 percent annually and 6% is the max possible. If the (averaged) CPI is between zero to 2%, that is the annual adjustment for that year. If the CPI is over 4%, the adjustment is 75% of the CPI amount > 4%. So as an example if the CPI was 5.5% that year, the pension inflation adjustment would be 2% + (5.5 - 4.0) * 0.75 = 3.125%. The name of the University of California pension plan is UCRP and is completely unrelated to the infamous CalPERS pension that is underfunded. The UCRP pension is designed to attract professors and faculty, who might have multiple PhDs, advanced engineering degrees, or even Nobel prizes in a few cases.
My spouse just passed away right before I retire. Obvioisly I cannot elect survivor benefit now that I no longer have a spouse so say I find another mate and we get married say 10 or 15 years from now after I retire can I then elect to have survivor benefit for the new wife?
Good video. It is my understanding that my spouse would lose her medical insurance benefit (FEHB) if I die first and she did not have survivor benefits. True?
Thank you! Generally speaking, if you don't elect SBP then your nonfederal employee spouse would lose access to FEHB. www.opm.gov/frequently-asked-questions/retire-faq/post-retirement/can-my-family-continue-their-health-insurance-after-i-die/#:~:text=If%20you%20are%20enrolled%20in,Health%20Benefits%20(FEHB)%20plan. www.opm.gov/healthcare-insurance/life-events/memy-family/what-happens-if-i-die/
Good info, I wondered what happened if the spouse of the employee died first. Ive been to fed retirement seminars and don’t remember that being discussed.
Thank you! Like anything, not all fed retirement seminars are created equal. We're not sure how the presenters/teachers are selected and what criteria is used to evaluate the quality of the information presented.
Is it true you can’t collect both a military and federal SBP if your spouse retires from both? Definitely don’t want to lose out on Federal SBP but military SBP almost paid in full and spouse is getting ready to retire from federal service. Can they be combined? Don’t want to lose what we paid into SBP but also sure the Federal plan would be higher. If he retires from both and has a SBP for both do you lose the premiums paid for the other?
You can collect both. We're so glad to hear that you have SBP on the military pension. It sounds like you're on the way to making an informed decision on the FERS SBP as well.
My husband was retired from USPS on 2019 after worked for 21 years and passed away on August 2023 (last year). Until now I’m still not receive survivor benefits from OPM. That’s bad !
Thank you for sharing your story. Are you sure that you and your spouse elected survivor benefits at retirement? If so, did you complete the necessary forms to claim any insurance and SBP? Spousal consent is required to decline SBP at retirement and the spousal consent must be done with a notary.
If you are both a military and Federal government retiree- can you participate in both agencies SBP? Will the spouse receive 55% of both pensions if both were paid into?
Thank you for commenting on our video. Your story resonates and empowers us to continue producing content that we hope will help folks make educated decisions. We've experienced clients passing away less than a year after retirement and knowing that we helped the family have survivor benefits is something that stays with us forever.
I received his civil service survivor benefits but not his military ones since he retired from the Air National Guard and hadn’t set up his survivor benefits since he couldn’t start receiving his military pension until he turned 60.
What if you are divorced, swore on a stack of Bibles to NEVER remarry & negotiated OUT of Survivor benefits. in QDRO? Could you keep it and make a child(ren) beneficoaries?
I'm not sure 3-400 a month for a $1000000 policy is a bargain. Maybe at age 57, but i dont think so. And unlike life insurance which will payout and be left to the estate, the pension stops when your spouse dies. A better video would walk through a variety of scenarios and identify where the survivor benefit wins and where it loses. Maybe do some mathematical projections too. I do agree that if a few hundred dollars breaks your retirement you arent ready to retire.
Thanks for the feedback. Remember, the SBP premiums are also pre-tax so the cost deducted from your pension isn't the net you would have to spend or buy life insurance. You are correct that life insurance proceeds (NOT USED) to provide survivor income to the spouse could be passed to the next generation/charity/etc. If you were to buy life insurance, would you buy term or permanent? Is your comment on cost of an insurance policy comparing SBP to Term or Permanent insurance?
@@fedemployeefinancialplanning I compared to term since permanent insurance is usually a ripoff. Personally I won't retire needing insurance or a survivor benefit of any sort as I'm already very close to FI. But the point is that you can't treat the pension like $1 mil because it is not the same, and so of course buying insurance is also not the same. How much longer do you project your spouse living than you is the real question when looking at the survivor benefit. If you're similar age it may be a few years based on averages assuming you're a male. The survivor benefit is most useful if you die the day after taking your pension and your spouse lives another 40 years. But if they get $40k for 5 years, that is a $200k benefit. Assuming you retire at 57 and live to 80, compound interest if you invest the difference is likely over $300k. I think if you have the average scenario and don't need the benefit (your spouse will be fine without it) then you come out ahead declining it. Of course if you have a significantly younger spouse or health worries the calculation changes.
@seanohara5754- We hope you're enjoying our content. Our team has helped federal and private sector clients retire for over 30 years. Our experience over 3 decades of successfully helping people retire and learning what is important to them at retirement, when they die, etc. is invaluable. If you'd like to continue this conversation, we invite you to schedule a call with one of our advisors at www.masonllc.net.
I fully agree with what you are stating here. However, for my wife and I, I don't think we need to go the 50% survivor benefit. When she retires from her job, she will get two pensions that will pay quite a bit more than what she is making now. She also will get a portion of my VA disability if I die before she does. We will take the 25% survivor election benefit so that she can stay on my health and dental insurance. I will also have the $25,000 in death benefits payable, so that should cover the cost for my burial (can be buried in VA cemetery as well). Finally, she will have what's left of my TSP. She should be well taken care of after my death (if the good Lord takes me first). It has nothing to do with no affording to be able to....just don't think we really need it. We have been blessed. Thank you for your information. It is greatly appreciated!
Thank you for your comment and feedback! We love hearing that our information is valuable! It's hard to disagree with logic and I'm not sure that we would disagree if we were your financial planners either. The key is to be very informed of what income looks like together and what it looks like after one is deceased and then making a completely educated decision on SBP. I would check things like the VA a second time to make sure we're not missing anything there. I would also verify that your spouse's pensions are not "non covered" pensions which would likely eliminate her ability to collect your survivor social security. Your Social Security claiming strategy is part of the SBP conversation as well. If we were your planners we'd also want to know the decision on Military SBP, assuming you're retired military as well. We talk internally often about "need". It's a really hard word. What we need and what we want are often different. What one needs in survivor income is probably different than what they want.
Awesome feedback! Although my wife has a "non-covered" pension... she did earn enough Social Security credits to earn a SS pension. I did not retire from the military. However, I did buy my 8 years in tower my federal retirement. Is there a cost to do an intial consult with you? How would I set up that up?
Thank you! Your spouse is subject to Government Pension Offset (GPO) rules. The first step in our process is a 30-minute Intro Phone Call. There is no fee for this. We use this time to learn about each other, ask fact finding questions, and determine if a relationship makes sense. Our goal is that potential clients leave this call better than they were before it, regardless of if they become an ongoing client. If you decide to schedule, we recommend that you and your spouse both attend the call. Here is a link to schedule (below). This link is for one of the 5 advisors on our team (Mike, Ken, John, Tommy and Ben). calendly.com/d/4cz-9cw-fh2/introductory-phone-call-2024
Disagree. At least for us…cheaper to buy a $350k life insurance policy at age 62 level term for 15 years at $1500 per year for my wife vs reducing her $65k per year FERs pension by 10%/ year for the rest of her life did not make sense. Good content and it is something all feds should put a lot of thought into. Of course I also will have my own FERs annuity plus my own tsp and remainder of her tsp if she dies before normal expectancy.
Thank you for the comment and for watching our videos. I'm not sure that you bought enough insurance to insure the full value of SBP. 350k looks to be about 10 years of what your SBP payments would be. Hopefully your policy has a conversion feature that extends beyond age 65. Sounds like you're both federal so this is probably a conversion of do we both "need" it versus is it a good deal? Also, her pension is not forever reduced if you predecease. Unfortunately, we never know when one will die and who will die first. We've had clients pass away in the first year of retirement.
Thank you for the feedback! We're financial planners first and we do this second. However, we're constantly improving and hope you're enjoying the videos and our podcast.
Disagree. Like all things it is situational. If both spouses are feds with pensions and healthcare, and sizable TSPs, opting for survivor benefits isn’t very clever.
Thank you for sharing your thoughts. We must agree to disagree. We are fans of survivor benefits when both spouses have pensions and have helped many families in this exact situation.
Dual Fed employee, same age, retiring at same time, relatively same high-3 (pensions would be 8-9K per month each). Other hypothetical accounts below…
2x $1.5M TSP
$800K-$1M Brokerage
$300-400K Roth
No debt at all
Could this be a case for electing no SBP?
Spouse 1 income = FERS 4k SS 3k
Spouse 2 income = FERS 4k SS 3k
At death you keep only 1 of the SS benefit. In this scenario, 14k of income drops to 7k (hypothetical) because you lost FERS and SS.
As you'd expect, I'd recommend that you schedule an Intro Call with us and go through the initial planning process before making your decision. If your numbers above are rooted in truth, we're in a strong position to add value to your financial plan.
I’ve been through a lot of seminars but no one touched on what you said about spouse dying first. Except video, I’m retired military, I didn’t get the survivor plan but that was because i’m also a federal employee. I will definitely be opting into full survivor plan at retirement . The benefit is too great. You earned a new subscriber.
Thank you for watching and subscribing!
I appreciate this. I have been debating what to do. My wife's family history indicates she should go first...but there is no guarantee. We looked into a large term insurance policy, but it was more expensive for me than to pay SBP. Your comment about not being ready to retire if you cannot afford the cost was powerful. The cost really is a drop in the bucket for us with our investments and pensions. Thanks for the sage advice.
@joedessenberger2048 Thank you so much for this comment! It's not easy producing the videos and podcast but comments like this help continue to motivate us to share what we do at Mason and Associates. I'm glad this was helpful. When are you retiring??
Great to know thank s for sharing my man.
You found a topic that is difficult to navigate and not well understood and lacking almost any RUclips content. Thanks for the video. I’d love to see more content on the topic. From my experience if you talk to an insurance salesman they’ll definitely show the superiority of life insurance. However a guaranteed benefit is valuable and you explained that perspective of electing the full survivor benefit. Federal HR seminars seem to stay far away from this topic.
Thank you! We have a few podcast episodes on this topic as well and worked really hard to help retired military elect SBP during the open season last year.
I'm a Fed Employee with no survirors...so yes...I will do that.
No spouse, no problem
Thanks for watching. Although you don't have a spouse, please share this video with friends, family and co-workers so they don't make the mistake of declining survivor benefits at retirement.
No kids, no wife, no problems in life 💪🏻
At 1:31 - as another data point, if you work in the University of California system, your pension is inflation adjusted based on the CPI of the (SF Bay Area + Los Angeles area) / 2. The adjustment is between 0 to 6 percent annually and 6% is the max possible. If the (averaged) CPI is between zero to 2%, that is the annual adjustment for that year. If the CPI is over 4%, the adjustment is 75% of the CPI amount > 4%. So as an example if the CPI was 5.5% that year, the pension inflation adjustment would be 2% + (5.5 - 4.0) * 0.75 = 3.125%. The name of the University of California pension plan is UCRP and is completely unrelated to the infamous CalPERS pension that is underfunded. The UCRP pension is designed to attract professors and faculty, who might have multiple PhDs, advanced engineering degrees, or even Nobel prizes in a few cases.
There are a variety of pension systems. Thank you for sharing your experience.
My spouse just passed away right before I retire. Obvioisly I cannot elect survivor benefit now that I no longer have a spouse so say I find another mate and we get married say 10 or 15 years from now after I retire can I then elect to have survivor benefit for the new wife?
Good video.
It is my understanding that my spouse would lose her medical insurance benefit (FEHB) if I die first and she did not have survivor benefits. True?
Thank you! Generally speaking, if you don't elect SBP then your nonfederal employee spouse would lose access to FEHB.
www.opm.gov/frequently-asked-questions/retire-faq/post-retirement/can-my-family-continue-their-health-insurance-after-i-die/#:~:text=If%20you%20are%20enrolled%20in,Health%20Benefits%20(FEHB)%20plan.
www.opm.gov/healthcare-insurance/life-events/memy-family/what-happens-if-i-die/
Good info, I wondered what happened if the spouse of the employee died first. Ive been to fed retirement seminars and don’t remember that being discussed.
Thank you! Like anything, not all fed retirement seminars are created equal. We're not sure how the presenters/teachers are selected and what criteria is used to evaluate the quality of the information presented.
@@fedemployeefinancialplanning why didn't you answer the question? Wasn't really about the seminar, it is what happens to the $
@@tommyfrederick7807 If the spouse died first, the employee/retiree gets the 5/10% added back to their pension.
@@tommyfrederick7807i thought he answered it in the video; if the spouse died, opm put your full pension back, and ypu can re-elect if remarried.
Is it true you can’t collect both a military and federal SBP if your spouse retires from both? Definitely don’t want to lose out on Federal SBP but military SBP almost paid in full and spouse is getting ready to retire from federal service. Can they be combined? Don’t want to lose what we paid into SBP but also sure the Federal plan would be higher. If he retires from both and has a SBP for both do you lose the premiums paid for the other?
You can collect both. We're so glad to hear that you have SBP on the military pension. It sounds like you're on the way to making an informed decision on the FERS SBP as well.
My husband was retired from USPS on 2019 after worked for 21 years and passed away on August 2023 (last year). Until now I’m still not receive survivor benefits from OPM. That’s bad !
Thank you for sharing your story. Are you sure that you and your spouse elected survivor benefits at retirement? If so, did you complete the necessary forms to claim any insurance and SBP? Spousal consent is required to decline SBP at retirement and the spousal consent must be done with a notary.
If you are both a military and Federal government retiree- can you participate in both agencies SBP? Will the spouse receive 55% of both pensions if both were paid into?
My husband passed away at 54 after 24 years of civil service. Those that don’t think it will happen need to plan on it happening.
Thank you for commenting on our video. Your story resonates and empowers us to continue producing content that we hope will help folks make educated decisions. We've experienced clients passing away less than a year after retirement and knowing that we helped the family have survivor benefits is something that stays with us forever.
I received his civil service survivor benefits but not his military ones since he retired from the Air National Guard and hadn’t set up his survivor benefits since he couldn’t start receiving his military pension until he turned 60.
What if you are divorced, swore on a stack of Bibles to NEVER remarry & negotiated OUT of Survivor benefits. in QDRO? Could you keep it and make a child(ren) beneficoaries?
There are so many variables in this question. We would have to read your divorce decree and separation agreement before having any opinion.
I'm not sure 3-400 a month for a $1000000 policy is a bargain. Maybe at age 57, but i dont think so. And unlike life insurance which will payout and be left to the estate, the pension stops when your spouse dies. A better video would walk through a variety of scenarios and identify where the survivor benefit wins and where it loses. Maybe do some mathematical projections too. I do agree that if a few hundred dollars breaks your retirement you arent ready to retire.
Thanks for the feedback. Remember, the SBP premiums are also pre-tax so the cost deducted from your pension isn't the net you would have to spend or buy life insurance. You are correct that life insurance proceeds (NOT USED) to provide survivor income to the spouse could be passed to the next generation/charity/etc.
If you were to buy life insurance, would you buy term or permanent? Is your comment on cost of an insurance policy comparing SBP to Term or Permanent insurance?
@@fedemployeefinancialplanning I compared to term since permanent insurance is usually a ripoff. Personally I won't retire needing insurance or a survivor benefit of any sort as I'm already very close to FI. But the point is that you can't treat the pension like $1 mil because it is not the same, and so of course buying insurance is also not the same. How much longer do you project your spouse living than you is the real question when looking at the survivor benefit. If you're similar age it may be a few years based on averages assuming you're a male. The survivor benefit is most useful if you die the day after taking your pension and your spouse lives another 40 years. But if they get $40k for 5 years, that is a $200k benefit. Assuming you retire at 57 and live to 80, compound interest if you invest the difference is likely over $300k. I think if you have the average scenario and don't need the benefit (your spouse will be fine without it) then you come out ahead declining it. Of course if you have a significantly younger spouse or health worries the calculation changes.
@seanohara5754- We hope you're enjoying our content. Our team has helped federal and private sector clients retire for over 30 years. Our experience over 3 decades of successfully helping people retire and learning what is important to them at retirement, when they die, etc. is invaluable. If you'd like to continue this conversation, we invite you to schedule a call with one of our advisors at www.masonllc.net.
Thank you
You're welcome!
I fully agree with what you are stating here. However, for my wife and I, I don't think we need to go the 50% survivor benefit. When she retires from her job, she will get two pensions that will pay quite a bit more than what she is making now. She also will get a portion of my VA disability if I die before she does. We will take the 25% survivor election benefit so that she can stay on my health and dental insurance. I will also have the $25,000 in death benefits payable, so that should cover the cost for my burial (can be buried in VA cemetery as well). Finally, she will have what's left of my TSP. She should be well taken care of after my death (if the good Lord takes me first). It has nothing to do with no affording to be able to....just don't think we really need it. We have been blessed. Thank you for your information. It is greatly appreciated!
Thank you for your comment and feedback! We love hearing that our information is valuable!
It's hard to disagree with logic and I'm not sure that we would disagree if we were your financial planners either. The key is to be very informed of what income looks like together and what it looks like after one is deceased and then making a completely educated decision on SBP.
I would check things like the VA a second time to make sure we're not missing anything there. I would also verify that your spouse's pensions are not "non covered" pensions which would likely eliminate her ability to collect your survivor social security. Your Social Security claiming strategy is part of the SBP conversation as well. If we were your planners we'd also want to know the decision on Military SBP, assuming you're retired military as well.
We talk internally often about "need". It's a really hard word. What we need and what we want are often different. What one needs in survivor income is probably different than what they want.
Awesome feedback! Although my wife has a "non-covered" pension... she did earn enough Social Security credits to earn a SS pension. I did not retire from the military. However, I did buy my 8 years in tower my federal retirement. Is there a cost to do an intial consult with you? How would I set up that up?
Thank you! Your spouse is subject to Government Pension Offset (GPO) rules. The first step in our process is a 30-minute Intro Phone Call. There is no fee for this. We use this time to learn about each other, ask fact finding questions, and determine if a relationship makes sense. Our goal is that potential clients leave this call better than they were before it, regardless of if they become an ongoing client. If you decide to schedule, we recommend that you and your spouse both attend the call. Here is a link to schedule (below). This link is for one of the 5 advisors on our team (Mike, Ken, John, Tommy and Ben).
calendly.com/d/4cz-9cw-fh2/introductory-phone-call-2024
Disagree. At least for us…cheaper to buy a $350k life insurance policy at age 62 level term for 15 years at $1500 per year for my wife vs reducing her $65k per year FERs pension by 10%/ year for the rest of her life did not make sense. Good content and it is something all feds should put a lot of thought into. Of course I also will have my own FERs annuity plus my own tsp and remainder of her tsp if she dies before normal expectancy.
Thank you for the comment and for watching our videos. I'm not sure that you bought enough insurance to insure the full value of SBP. 350k looks to be about 10 years of what your SBP payments would be. Hopefully your policy has a conversion feature that extends beyond age 65. Sounds like you're both federal so this is probably a conversion of do we both "need" it versus is it a good deal? Also, her pension is not forever reduced if you predecease. Unfortunately, we never know when one will die and who will die first. We've had clients pass away in the first year of retirement.
Yeah. It was more like "do we need it". I am comfortable that I could survive with my fers, SS and $2M TSP.
Buy and use a better .microphone
Thank you for the feedback! We're financial planners first and we do this second. However, we're constantly improving and hope you're enjoying the videos and our podcast.
What if you don't have a spouse or children?
Disagree. Like all things it is situational. If both spouses are feds with pensions and healthcare, and sizable TSPs, opting for survivor benefits isn’t very clever.
Thank you for sharing your thoughts. We must agree to disagree. We are fans of survivor benefits when both spouses have pensions and have helped many families in this exact situation.