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.