Please read the following answers to your frequently asked retirement questions.
Are you a federal employee who is married to another fed?
Do we need to provide each other with survivor’s benefits?
The answer to this question is based on financial need. The simple question to ask is this: “If I die and my retirement stops, will this cause a financial hardship for my spouse?” If your spouse is able to pay the bills and maintain the household without the benefit of your survivor’s benefit, then it is not as important as it would be for a spouse who is financially dependent on the CSRS or FERS annuity. Age difference and health of each spouse may be considered, but since the actual date of death is unpredictable with any degree of certainty, financial planning should be done by looking at the worst-case scenario.
Should we be enrolled in self and family health benefits, or should we carry self only (if we don’t have dependent children)?
Sometimes it’s less expensive for married federal employees or retirees without dependent children to carry two individual self only plans. When considering such an approach, remember to take into account out-of- pocket expenses such as deductibles, co-payments and catastrophic limits as well as the premiums.
How much FEGLI (Federal Employees Group Life Insurance) am I allowed to keep in retirement?
The amount of basic FEGLI you will carry into retirement is based on your salary on the day you retire. You are eligible to continue basic insurance if you meet all of these requirements:
You have been insured for the five years immediately preceding your retirement or since your first opportunity to enroll
You have not converted your life insurance coverage to an individual policy
How much will the FEGLI cost to keep?
75% reduction, under this option you maintain the basic coverage that was in effect on your last day of employment, but after age 65 (or when you retire if you are already over 65), coverage reduces by 2% per month until it reaches 25% of hits original value. You stop paying premiums (.325 per $1,000 of coverage per month) when the reduction begins.
50% reduction, under this option, when you turn 65, coverage declines by 1% per month until it reaches 50% of the original value. You pay (.325 per $1,000 of coverage per month) and additional premiums ($0.60 per $1,000 of coverage per month) for this benefit until the reduction begins. After that, you must continue paying the additional premiums.
No Reduction, under this option you can maintain the basic coverage in effect on your last day of employment. You will pay basic premiums ($.325 per $1,000 of coverage per month) and additional premiums ($1.83 per $1,000 of coverage per month) for this benefit until you turn 65, and then pay only the additional premiums.
Standard Option A
You don’t need to make a retirement election for Standard Option A coverage. After you turn 65 (and are retired), your Option A coverage of $10,000 will decline by 2 percent per month until it reaches $2,500. No withholding is required after you turn 65
Option B and C Coverage, Full Reduction
After you turn 65 or retire (if later), your Option B or Option C coverage will decline by 2% of the pre-retirement amount per month for 50 months, at which time coverage will end.
Option B and C Coverage, No Reduction
Retiring employees may choose to continue to pay premiums after age 65.
Do I have to be in the same FEHBP (Federal Employees Health Benefit Plan) for five years?
No. You can switch plans every open season if you feel like it, as long as you remain under the FEHBP umbrella.
Do I have to be in family coverage for five years before I retire?
No. Employees and retirees can change to self and family coverage during any open season.
What about my survivors? Can they continue FEHBP coverage?
For your surviving family members to continue your health benefits enrollment after your death, you must have been enrolled in self and family coverage at the time of your death. Also, at least one of your family members must be entitled to a survivor’s annuity under CSRS or FERS. The annuity does not have to be enough to cover the premium.
If I retire at age 55, am I able to withdraw money from my TSP without incurring the 10% early withdrawal penalty?
Yes, you do not have to wait until age 59½ if you draw directly from the TSP.