CSRS Offset and survivor’s Social Security benefit

Q. Under CSRS Offset rules, if the survivor/widow’s Social Security benefit is based on her own earnings and not her deceased spouse’s, then OPM does not adjust Social Security to CSRS and she gets 55 percent of regular CSRS, with no Social Security adjustment. That’s pretty straightforward in the OPM booklets discussing CSRS Offset.

It gets tricky for planning if the widow’s Social Security is based on the deceased’s Social Security. In other words, my CSRS Offset husband will get a higher Social Security benefit than I. If he dies first, I will then receive a Social Security survivor benefit of 100 percent of his Social Security since his benefit is higher than mine.

But since his Social Security includes offset years, and since my Social Security as a surviving widow would include his offset years, OPM will adjust or offset the CSRS survivor/widow’s benefit by the same dollar amount as was the Social Security adjustment to my husband’s CSRS, because the adjustment is based on the same Social Security benefit (his). I understand this part. The dollar amount of the adjustment is the same for both annuitant and survivor in this example.

Presuming he has paid for a survivor benefit of 55 percent, then theoretically, I should receive 55 percent (roughly) of his CSRS Offset benefit, as OPM has already adjusted it for the Social Security offset years. But that is the case only if OPM takes his already adjusted CSRS and multiplies that amount by 55 percent to arrive at the survivor benefit. While that seems perfectly reasonable, I can’t find the exact wording that says that is how OPM calculates it.

For example, if full CSRS were $3,000 and the Social Security-adjusted CSRS were $2,000 ($1,000 less for Social Security adjustment), then 55 percent of the annuitant’s $2,000 would leave $1,100 for the survivor.

But OPM may be doing it another way — if full CSRS were $3,000, and 55 percent were calculated at this point, it would be $1,650. If at this point the Social Security adjustment of $1,000 were taken out, the remainder would be $650 for a survivor benefit. The Social Security adjustment dollar amount deduction is the same for both annuitant and survivor, but the sequence of calculations matters to a survivor. One would think the information would be posted at OPM.

I was hoping someone had had a similar situation so I would be able to tell whether OPM takes the prior-adjusted CSRS and multiplies it by 55 percent (or whatever survivor benefit is selected) to arrive at a benefit amount, or whether they multiply an unadjusted CSRS by the survivor percentage first and then make the deduction for SS to arrive at a benefit amount for the survivor. The sequence in the calculations is critical.

A. Go to www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c071.pdf and scroll to Section 71A2.1-3.