FEGLI Basic Reduction Retirement: 75%, 50%, and No Reduction Explained
The Election You Can't Take Back
When you retire from federal service, SF 2818 asks you to choose one of three reduction elections for your Basic FEGLI coverage. The choice determines how much of your Basic Insurance Amount (BIA) remains in force after age 65, and what you pay for it — potentially for the rest of your life.
You can always step down later (from No Reduction to 75% Reduction, for example), but you can never step up. If you elect 75% Reduction at retirement and regret it at 70, the full-coverage option is permanently closed.
How Your BIA Is Calculated
Your Basic Insurance Amount equals your annual rate of basic pay, rounded up to the nearest $1,000, plus $2,000. A GS-14 Step 5 in the DC locality area earning $134,435 would have a BIA of $137,000 ($134,435 rounded up to $135,000, plus $2,000).
Active employees under age 45 also receive an Extra Benefit equal to their BIA, effectively doubling the death benefit. That extra benefit phases out in 10% increments between ages 36 and 45 and disappears entirely at 45. By retirement age, your benefit is your BIA alone.
The Three Reduction Elections
75% Reduction (Default)
Starting the second month after you turn 65 (or the second month after retirement, if you retire after 65), your Basic coverage reduces by 2% of the original BIA each month. After approximately 37.5 months, it stabilizes at 25% of your original BIA.
Cost before 65: $0.3467 per $1,000 of BIA per month. On a $137,000 BIA, that's $47.50/month.
Cost after 65: Free. Zero premium for life.
Final death benefit: 25% of your BIA. On $137,000, that's $34,250 — payable under your SF 2823, subject to any applicable court order.
This is the default election. If you don't mark a different choice on SF 2818, OPM applies 75% Reduction automatically.
50% Reduction
Coverage reduces by 1% of the original BIA per month starting at the same trigger point (second month after 65 or retirement), stabilizing at 50% of your BIA.
Cost before 65: $1.0967 per $1,000 of BIA per month. On $137,000, that's $150.24/month.
Cost after 65: $0.75 per $1,000 per month. On $137,000, that's $102.75/month — paid for life.
Final death benefit: 50% of your BIA. On $137,000, that's $68,500.
The 50% election costs roughly three times more than 75% Reduction before age 65, and then the premium continues at $0.75/$1,000 indefinitely. You're paying $102.75/month for life to keep an additional $34,250 of coverage beyond what the 75% election provides.
No Reduction
Your BIA stays at 100% permanently. The full face amount remains in force for your entire life, regardless of age.
Cost before 65: $2.5967 per $1,000 of BIA per month. On $137,000, that's $355.75/month.
Cost after 65: $2.25 per $1,000 per month. On $137,000, that's $308.25/month — paid for life.
Final death benefit: 100% of your BIA. On $137,000, that's $137,000.
The No Reduction election deducts $308.25 every month from your annuity, permanently. Over 20 years of retirement (65 to 85), that's $73,980 in premiums for $137,000 of coverage. Over 30 years (65 to 95), it's $110,970.
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Comparing the Three Side by Side
For a retiree with a $137,000 BIA who retires at 62 and lives to 85:
| Election | Monthly Cost (62–65) | Monthly Cost (65+) | Total Premiums Paid (62–85) | Death Benefit |
|---|---|---|---|---|
| 75% Reduction | $47.50 | $0 | $1,710 | $34,250 |
| 50% Reduction | $150.24 | $102.75 | $30,069 | $68,500 |
| No Reduction | $355.75 | $308.25 | $86,787 | $137,000 |
The 75% election is almost free over a lifetime — $1,710 total for $34,250 of permanent coverage. The No Reduction election costs nearly $87,000 for $137,000 of coverage. Whether that premium outlay is worth the additional $102,750 of death benefit depends entirely on your family's financial exposure if you die.
The Free-After-65 Reality
The 75% Reduction is the only election that truly becomes cost-free. The 50% Reduction reduces your premium after 65 but doesn't eliminate it. The No Reduction election only lowers your per-thousand rate from $2.5967 to $2.25 — still a substantial monthly deduction.
This distinction matters for cash-flow planning. Many retirees assume "Basic becomes free after 65" without checking which reduction they elected. Only the 75% Reduction delivers on that expectation.
When to Consider No Reduction
No Reduction makes mathematical sense in limited circumstances: when the death benefit is genuinely needed for estate planning, when the retiree's health makes private replacement coverage impossible, or when a partial Living Benefit election forces No Reduction (OPM requires it). For most retirees, the 75% Reduction — which delivers free permanent coverage at a 25% floor — captures the best value in the FEGLI Basic program.
The FEGLI Decision Guide lays out the full premium math across all three elections with scenarios for different salary levels and retirement ages, so you can compare total lifetime costs before you sign SF 2818.
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