SURVIVOR BENEFIT PLAN Kate Horrell financial educator KateHorrell.com

SURVIVOR BENEFIT PLAN

Kate Horrellfinancial educatorKateHorrell.com

• Income continuation plan for dependents of deceased active duty and retired servicemembers.

• Two parts: active duty and retiree

• Lots of details and some choices

WHAT ISSBP?

• Choice made at retirement

• Choice made by spouse

• Assume it is irrevocable*

• VERY IMPORTANT

RETIREMENT

• Cost, as much as 6.5% of retired income

• Irrevocable decision• Income is taxable*

CONS

• Lifetime income*• Cost of living adjustments• Low cost coverage• Cannot be cancelled or

modified due to age or illness

• Not impacted by Social Security

• Premiums paid pre-tax*• Premiums end when aged 70

and have paid for 30 years

PROS

• Cost is 6.5% of covered amount

• Covered amount may be full amount of retirement pay, or a portion thereof

COST

• Survivor benefits are paid as annuity

• 55% of covered amount

• Cost of living adjusted• Taxable income• May be offset by DIC

or VA benefits

BENEFIT

• Spouse• Spouse and

children• Children only• Former spouse• Natural interest

person*

ELIGIBLEBENEFICIARIES

• SBP benefits are reduced, dollar for dollar, by the amount of DIC benefits

•

CRAZY AND COMPLICATED STUFF

• Overall financial situation

• Health and age of spouses

• Likelihood of receiving DIC

HOWTO DECIDE?

• Automatic• No cost• Full coverage

(100% of pay equals 55% replacement income)

• Offset by DIC

ACTIVEDUTYSBP COVERAGE

• http://www.dfas.mil/retiredmilitary/provide/sbp.html• www.katehorrell.com• http://militarypay.defense.gov/survivor/sbp/01_overv

iew.html

RESOURCES