- April 26, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Considering the Survivor Benefit Program as Part of Retirement Planning
As I am approaching retirement, one of the considerations on my mind is the survivor benefit program and whether it is a prudent investment. I am in the process of assessing my financial options and looking into how this program fits into my overall retirement strategy. It is essential for me to understand the potential benefits and costs associated with this program to make an informed decision.
One of my concerns is regarding the monthly premium for the survivor benefit program. I would like to know if the premium is fixed or if it increases annually, particularly in line with cost of living adjustments (COLA). Understanding the structure of the premium payments and how they may fluctuate over time is crucial for me to gauge the long-term affordability and value of this program.
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The decision to opt-in or opt-out of the SBP should be made after doing a full review of your financial situation. I highly recommend finding a fee-only financial advisor to discuss this decision. It would be even better if they have a military background or an understanding of the SBP. https://militaryfinancialadvisors.org/ is a great place to find an advisor that can help you make the best decision that is right for you.
Here’s just a few things to think about:
-Do you have any debt right now? Will you have that debt when you retire?
-Is your spouse older or younger than you? How long do you think you will live compared to your spouse? What is your family tree like with regard to lifespan? How old was your grandfather when he passed? How old is your father? Ask the same questions about your spouse to make accurate assumptions.
-Have you saved and invested enough that your family would be okay if you passed away today? If you did opt-out of the SBP, could your family continue to pay the mortgage (or rent), utility bills, buy groceries, etc using the accounts that are payable to them at the time
of your death?
-Your military pension stops at death. The SBP is an annuity that pays 55% of what your pension would have been and it is COLA adjusted, so it goes up each year. For example, if you died the month after you retired and your pension was $3000 per month, then your spouse would receive $1650 from SBP per month. Is what the SBP would pay enough to meet what your family needs?
-Do you currently have life insurance (term, whole-life, or universal) after excluding SGLI?
-If you don’t currently have a civilian life insurance plan, will you consider getting a civilian life insurance policy before you retire? Will you qualify for a life-insurance policy (given your current health) if you choose to apply for a life insurance policy after you retire?
I found this Marine’s research paper well done and useful. His data shows the most benefit for couples where the service member is considerably older than the dependent. My wife is 12 years younger than me, so we’re in that camp. That being said, I believe it is still useful in other circumstances.
[https://apps.dtic.mil/sti/pdfs/ADA475889.pdf](https://apps.dtic.mil/sti/pdfs/ADA475889.pdf)
SBP is a option that is helpful to many people but it’s not for everyone. I like Kate Horrell’s series on the topic: https://www.katehorrell.com/survivor-benefit-plan/
Coverage is a percentage of your base amount, so the dollar amount will change as your retirement amount changes. https://militarypay.defense.gov/Benefits/Survivor-Benefit-Program/SBP-Worksheet/
For some, absolutely…but for others, it’s not. This is the only correct answer here.
Are there whole life insurance policies that are cheaper? When I looked a few years ago the costs skyrocket just when you need them.