How to Calculate a Survivor's Annuity

Qualified retirement annuities have a benefit paid to surviving spouses when the annuity owner dies. The Internal Revenue Service states that the amount a surviving spouse can receive must be at least 50 percent -- but not to exceed 100 percent -- of what the deceased was receiving while alive. Federal programs use predetermined calculators to establish the survivor annuity. Non-qualified or private annuities are subject to contract terms and conditions; contact private administrators regarding survivor benefits.

Instructions

Calculate Survivor Amount

1. Determine if you are a Civil Service Retirement System or Federal Employees Retirement System annuity recipient. The two federal retirement plans use slightly different calculating formulas. The Civil Service Retirement System allows 55 percent full survivor benefits while FERS maxes out at 50 percent.

2. Write the base annual annuity. Assume the annual payout is $40,000.

3. Multiply the base annual annuity by the maximum amount: $40,000 x 0.55 = $22,000. The max would be 50 percent for FERS employees, or $20,000.

4. Provide a notarized waiver signed by a surviving spouse while the employee is still alive to reduce the percentage used for benefits. Maximum survivor benefits reduce the annual payment employees receive, calculated as a "Reduction Formula."

Reduction Formula

1. Write down the maximum percentage for a survivor benefit based on your federal annuity program.

2. List the employee's total annual annuity. Assume it is $40,000.

3. Subtract $3,600 from a CSRS annual annuity payment: $40,000 - 3,600 = $36,400. All annuities are required to calculate the figure based on the annual payment less the first $3,600.

4. Multiply the remainder by 10 percent: $36,000 x 0.10 = $3,640. Add $90 to this amount: $3,640 + $90 = $3,730. The $90 is 2.5 percent of the first $3,600 per the requirements of the Office of Personnel Management formulas and minimums.

5. Subtract the sum from the employee's total annual annuity: $40,000 - $3,730 = $36,270. This is the reduced annual annuity. Divide the reduced annual annuity by 12 for a monthly payment: $36,270 / 12 = $3,022.50. This is the new annuity payment for the employee.

References

• IRS.gov: Retirement Topics - Qualified Joint and Survivor Annuity
• Civilian Personnel Advisory Center: Survivor Annuities
• Federal Retirement: Determine Full Survivor Annuity Benefits
• Office of Personnel Management: Marriage/Divorce