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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