Spousal annuity cost


Q. The cost for the full spousal annuity is 10 percent of the retirement income. As the retirement income increases with cost-of-living adjustments, does the spousal annuity cost increase?

Example: Year 1 retirement income: $50,000; spousal annuity cost: $5,000

Year 20 retirement income: $65,000; spousal annuity cost: $6,500

A. It’s a permanent one-time reduction in your annuity. Using your example, if your unreduced annuity was $50,000, electing a full spousal benefit would cost 10 percent or $5,000. Your new annuity would be $45,000, which would be increased over time by annual cost-of-living adjustments. Were you to die, your widow would receive an annuity equal to 50 percent of your original $50,000 annuity, increased by any COLAs you had received before your death.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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