Now is the time to pull together all of your receipts, pay statements, loans and bank account information. There are many things to consider for both CSRS and FERS federal employees and the sample spreadsheet included on this page will help you see the value of completing this form. A copy of the Microsoft Excel Retirement Cost analysis spreadsheet is available on this site. You can save the spreadsheet to your local computer hard drive and work on it off line. This spreadsheet shows approximately what you will have left over after you pay all of your bills before and after you retire. The last column represents what your survivor will have remaining from their reduced annuity after you die. This exercise provides an opportunity for you to review and make changes to increase you retirement income.

Gather Up the following Documents in preparation for completing this spreadsheet:

• Pay Stubs

• Insurance Policies

  • Life

  • Auto

  • Home

  • Umbrella

• Loans

• Utility costs

• Other expense items

• Last years taxes

Table R1, listed below, is not all inclusive and you can add or remove expenses as you see fit on the downloaded version. The sample here is for a federal employee who will soon retire at age 55. He is a CSRS employee and worked 35 years for Uncle Sam. His top grade was a GS-11, step 6.

All expenses are listed on the chart for pre retirement per year and month and again for post retirement per year and month. The last column is for calculating what your spouse will have to live on with current expenses after you pass on. This is a very revealing analysis. Note that in retirement this person will be living on an annuity of approximately $36,985. His total expenses after retirement are $33,835 leaving him with a buffer of just over $3,000 for emergencies. If there are unanticipated expenses or increased costs this person will need to be able to tap other retirement savings such as savings bonds, his Thrift Savings plan, or other investment income. The other option, if you don't have much in your other savings plans, is to continue to work at least part time some where.

After completing this chart you may determine that it is not feasible for you to retire if you were depending 100% on annuity income. Most in the federal sector have the Thrift savings plan which can substantially augment your retirement income. Others purchased savings bonds through payroll deduction and you and your spouse may be eligible for social security when you reach age 62 or older if you worked over 40 quarters, 10 years, in the private sector. If you are in the FERS system and retire at or after your eligibility date social security offset will help you make ends meet. 

The last column is significant to the surviving spouse. In this example, the surviving spouse's annuity reduces to 55 percent of the retiree's annuity, or $20,341. The survivor has expenses totaling $19,680, way to close for comfort. Ideally, insurance would add a blanket of security for the survivor along with social security, Thrift Savings and other investment income. The survivor may have to change their lifestyle considerably to live comfortably in retirement.

The above discussion should get you thinking about where you need to go from here. You can cut unnecessary expenses, possibly move to a less expensive home, sell the second car. There are lots of options. Also, in the survivor's case, there are a number of cost cutting things they can do immediately such as change their health insurance from a family plan to self only. This one action alone can save thousands each year.

SAMPLE RETIREMENT COST ANALYSIS
SPREADSHEET
(Table R-1)

 

EXPENSE	Pre/year	Pre/mo	Post/year	Post/mo	Survivor	Comments
Mortgage	13800	1150	0	0	0	Paid off mortgage at retirement
Mtg Taxes	3800	317	3800	316	3800
Gas	1050	87.5	1050	87.5	1050
Light	1100	92	1100	92	900
Phone	500	42	360	30	360
Water/Sewage	720	60	720	60	432
Security	0	0	0	0	0
Garbage	116	10	116	10	116
Lawn Service	0	0	0	0	0
Cable	540	45	540	45	540
Internet Access	363.4	21.95	363.4	21.95	363.4
Other
Other
SUBTOTALS	21989.4	1825.45	8049.4	662.45	7561.4
INSURANCE
Employee
FEGLI         59K	237.74	19.81	237.74	19.81	0	With 75% reduction to $0 at 65
Policy 1       25K	265	22	265	22	0
Policy 2
Home Care	457	39	457	38	0
Other
Spouse
Policy 1       25K	216	18	216	18	216
Policy 2        3K	0	0	0	0	0
Home Care	444	37	444	37	444
Other
Home	490	40.83	490	40.83	490
Umbrella	0	0	0	0	0
Car #1	585	48.75	585	48.75	0
Car #2	600	50	600	50	600
Mobile Home
Motor Cycle
Health Ins	3692	307.66	3692	307.66	1113.6	Survivor must change to self only
SUBTOTALS	6986.74	583.05	6986.74	582.05	2863.6
PAY
Gross Pay	56,900	4,741	36,985	3,082	20,341
Deductions
Social Security
CSRS Ret  (7%)	3,983	331.87	0	0		Amount paid into CSRS
State Tax   (3%)	1707	142	0	0		PA does not tax retirement
Fed Tax	7,567	630	3,500	291	1500	Varies per exemptions, etc.
Medicare	804	67	0	0
TSP	3,983	367	0	0		No contributions after retirement
CFC	26	2	0	0		"
Savings Bond	1,300	108	0	0		"
SUBTOTALS	19369.53	1647.87	3500	291	1500
AUTOs
Car 1	1200	100	600	50	0	Check Ins Co for rate reductions
Car 2	600	50	500	41	400
Maint 1	200	17	200	17	0
Maint 2	200	17	200	17	300
Loan	2592	216	0	0	0
SUBTOTALS	4792	400	1500	125	700
FOOD/MISC
Groceries	8500	704	7000	583	4000
Clothing	1500	125	1000	83	1000	Depends on habits/etc.
SUBTOTALS	10000	829	8000	666	5000
ENTERTAIN
Eat Out	1800	150	2400	200	1000
Misc	1200	100	2400	200	1000
Other
SUBTOTALS	3000	250	4800	400	2000
EXPENSES	21989	1825	8049	662	7561
INSURANCE	8557	721.23	7986.2	664.9	2919
PAY WITHHOLD	19,367	1697	3500	291	1500
AUTOS	4192	400	1500	125	700
FOOD/MISC	10000	829	8000	666	5000
ENTERTAIN	3000	250	4800	400	2000
TOTAL ALL	67105	5722.23	33835.2	2808.9	19680

SURVIVOR ANNUITY ELECTION CONCERNS

 

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One key point to consider for married retirees is the election of a survivor annuity for your spouse. If you elect a full survivor's annuity your spouse will receive 55% of your annuity when you die. The cost for this is just under 10% of your annuity. Some retirees consider alternatives such as a large insurance policy. There are risks to that approach. Read on for complete information.  

Many approaching retirement debate whether or not to take a full survivor’s annuity – which  reduces their annuity by close to 10% – or to simply purchase a large insurance policy, at less cost, instead. There are a number of options for you to consider and each option has its own potential risks that need to be evaluated.  

Retirees can take a full or partial annuity or depending on your personal situation – and how much you saved through prudent investing – you may be able to forgo a full survivor’s annuity with some exceptions. 

Regardless of what you decide you need to know several key facts. Your spouse MUST agree to a reduced annuity and sign the waiver form included with your retirement application. Also – and this is a critical issue –  if you and your spouse elect NO survivor’s annuity your spouse will not be covered under your federal health insurance coverage when you retire. You MUST elect a minimum annuity as described on your retirement application for your wife to be covered under your Federal Group Health Insurance program. View the CSRS and FERS minimums before electing your survivors benefits if you want your spouse to be covered by the FEHB program.

I consider the insurance option too great a risk for most spouses. The survivor's annuity is backed by the federal government. There isn't any third party involved. If you and your spouse choose an insurance policy rather than have your annuity reduced research the insurance company thoroughly before making this decision. Insurance companies can go bankrupt and your spouse could be left with nothing. I'm not saying that insurance should not be considered at all, what I'm saying is that you must be very careful. If you decide to buy insurance instead of electing a survivor's annuity you can check the insurer's financial stability with several rating services. Make sure that the company you intend to work with is rated high on their lists. A.M. Best ratings are free as long as you register on-line and they are very easy to use. They rate the financial strength of Insurance companies from A++, Superior to S (Rating Suspended) and everything in between. Several services such as Weiss Ratings charges $14.95 for a comprehensive rating. I found the A.M. Best site very easy to use and all that I had to do was register to obtain unlimited ratings.

INSURANCE RATING LINKS

• A.M. Best http://ambest.com/ratings/search.html

• Moody's Investor's Service http://www.moodys.com/

• Standard and Poor's http://www.standardandpoors.com

• Weiss Ratings http://weissratings.com

NOTE: Many of these rating reports are also available at large public libraries. 

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