I am looking for help in deciding whether to take the full annuity with disability retirement from federal government (FERS), or whether to elect a survivor benefit. We are pretty flustered with life and decisions at the moment, and could really use a sanity check from you all.
The full disability annuity will be about $5100/month. OPM will take 10% of the annuity, in exchange for a 50% survivor benefit for the spouse. Or take 5% of the annuity, for a 25% survivor annuity for spouse. This is for the disability retirement annuity which will go through age 62, and then retirement pensions will start.
Our inclination is to do the full annuity, opting out of the survivor annuity for the spouse.
We have $1.25M term life insurance in place for each spouse. We think it seems a little expensive to “buy” additional coverage/income through this spousal annuity which would last until pensions start at 62.
The disability we are dealing with is not one that reduces life expectancy. (Just adds misery lol)
But we realize that if disabled spouse dies before 62, surviving spouse would lose access to the federal government employee health insurance. Surviving spouse does have lifetime medical through his employer, though -- currently and upon age 62. He expects to retire early, timeline unknown right now, and during early retirement period he would want federal insurance or ACA.
General background:
-Investments $2.4M, home equity $800K, no debt other than mortgage. Allocation: 50/50, low cost index funds, treasuries. Modest house in VHCOL area, home value $1.1M.
-Spouses are both 45. With 1 young kid whose college we are saving for now, so far $100k is earmarked (not included in investments above).
-Non-disabled spouse, $155k salary. He will have a pension of $60k per year when turning 62, with his current years of service and salary. Disabled spouse will have a pension also, at 62, and her pension will be roughly $30k with current numbers. Both will have social security retirement.
-Annual expenses we are planning for (sort of forever) are $96-108k. This amount includes $22k mortgage annually, which we will eventually pay off. Mortgage principal remaining is $300k, with a low interest rate so we are keeping it.
-Health insurance will continue through federal government employer.
The full disability annuity will be about $5100/month. OPM will take 10% of the annuity, in exchange for a 50% survivor benefit for the spouse. Or take 5% of the annuity, for a 25% survivor annuity for spouse. This is for the disability retirement annuity which will go through age 62, and then retirement pensions will start.
Our inclination is to do the full annuity, opting out of the survivor annuity for the spouse.
We have $1.25M term life insurance in place for each spouse. We think it seems a little expensive to “buy” additional coverage/income through this spousal annuity which would last until pensions start at 62.
The disability we are dealing with is not one that reduces life expectancy. (Just adds misery lol)
But we realize that if disabled spouse dies before 62, surviving spouse would lose access to the federal government employee health insurance. Surviving spouse does have lifetime medical through his employer, though -- currently and upon age 62. He expects to retire early, timeline unknown right now, and during early retirement period he would want federal insurance or ACA.
General background:
-Investments $2.4M, home equity $800K, no debt other than mortgage. Allocation: 50/50, low cost index funds, treasuries. Modest house in VHCOL area, home value $1.1M.
-Spouses are both 45. With 1 young kid whose college we are saving for now, so far $100k is earmarked (not included in investments above).
-Non-disabled spouse, $155k salary. He will have a pension of $60k per year when turning 62, with his current years of service and salary. Disabled spouse will have a pension also, at 62, and her pension will be roughly $30k with current numbers. Both will have social security retirement.
-Annual expenses we are planning for (sort of forever) are $96-108k. This amount includes $22k mortgage annually, which we will eventually pay off. Mortgage principal remaining is $300k, with a low interest rate so we are keeping it.
-Health insurance will continue through federal government employer.
Statistics: Posted by pizzagirl — Sun Mar 03, 2024 9:34 pm — Replies 4 — Views 383