SURVIVOR BENEFIT PLAN Kate Horrell financial educator KateHorrell.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 IS SBP?

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* ELIGIBLE BENEFICIARIES

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 HOW TO DECIDE?

Automatic No cost Full coverage (100% of pay equals 55% replacement income) Offset by DIC ACTIVE DUTY SBP COVERAGE

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