To retired military, question about SBP - RV-Dreams Community Forum

Old Snipe · RV-Dreams Family Member

To retired military, question about SBP

DorisandDave · RV-Dreams Family Member

Old Snipe,
I would recommend you take at least the "reduced" SBP. It's very inexpensive and the little extra money for your survivor is always nice.
We took the reduced when my DH retired in 95. Then you can make up the difference with some commercial term, decreasing term or whole life. Whichever you think seems appropriate. pro's and con's of each.
I would also recommend you talk to an insurance agent or financial planner that has experience working with military. USAA or FIRST COMMAND are two that come to mind.
Good luck with your decision and good luck with retirement.....it's great!!

NorCal Dan · RV-Dreams Family Member

We didn't take it. After much discussion we decided against it. Seemed a rather steep price to pay. We have always been healthy. And I have good investments that continue to grow even in this economy. DW also worked and will be eligible for SS (assuming it remains viable). So we opted out of SBP. It all depends on your financial situation at retirement time.

Doncat · RV-Dreams Family Member

We like Doris and Dave chose the reduced SBP, even my insurance guy at First Command told me it was a good deal at the minimum premium.

TXRVr · RV-Dreams Family Member

First congrats on retirement and thanks for your service.

ABSOLUTELY, enroll in SBP. If you do not, you will not have the option to change your mind. Yes, it costs more than a commercial insurance policy which is a valid reason just to do minimum premiums. It's been awhile since I checked my LES, but my base line enrollment was about $16/mo.

One good reason to at least be enrolled is that over the years Congress has changed the program several times....always for the better.

There are several good info websites available. Here's one. http://militarypay.defense.gov/survivor/sbp/01_overview.html

If you haven't been provided one, then get a copy of the 2008 Pre-Retirement Guide from retirement services. There are several pages of info on SBP in it.

Delaine and Lindy · RV-Dreams Family Member

I took the total SBP, my problem was I have a existing Medical problem and the Insuraces I tried was totally out of reason ($$$$). I lost my first wife and have since remarried my high school sweetheart and she is on the plan. Had to wait a year. Don't know the cost but its expensive but 55% if my base pay is a lot of money, and my wife has good genes. And most know what is happening to the Insurance companies. So if there is a country left she will at least have some income. Because this RVing does tend to be expensive. GBY....

witty · RV-Dreams Community Member

Is you choose to purchase SBP you and your wife need to be aware that if you die of a service connected cause such as an ailment resulting from Agent Orange or one of the contaminates in the first Gulf War or the current ones, your widow will be eligible for Dependency and Indemnity Compensation (DIC) from the VA.

If DIC is awarded the amount of SBP your widow receives is reduced dollar-for-dollar by the amount of DIC your widow receives. The government will give her a partial refund of the premiums you paid with no interest; this refund is taxable in the year the lump sum payment is received. The taxes can be quite hefty if you paid into SBP for a number of years.

Remember that your military retirement pay is based the average of the highest 3 years of BASE PAY. No allowances are included in this calculation. SBP is based on 55% of your retirement pay. If you have not actually calculated the amount of retirement pay you would receive, you will probably receive less in retirement pay than you anticipated, and your widow will receive less in SBP than you anticipated.

For most enlisted personnel, NCOs and junior officers the DIC offset to SBP frequently means that your widow will receive very little or nothing at all from the SBP for which you paid. DIC is currently $1154 per month.

The DIC offset to SBP often leaves widows without adequate income to pay for even a very modest lifestyle.

The really odd thing is that if the widow remarries after the age of 57, she will receive full DIC and full amount of SBP for which you paid. If she chooses to remain unremarried, her income from SBP will continue to be offset. (This kind of makes you wonder if you should line your wife up with a new husband before you die

)

This information is usually not briefed at retirement briefings. DoD has made a concerted effort to avoid revealing this information to those who are in the process of retiring.

Additionally, someone mentioned that a widow could draw Social Security because she had worked. You should be aware that a widow can draw a Social Security widows' pension against her husband's Social Security account at age 60 (earlier if she is totally disabled).

Although I used the feminine gender here, this information applies to both widows and widowers.