To SBP, or Not to SBP? Evaluating Your Survivor Benefit Plan Option at Retirement

To SBP, or Not to SBP? Evaluating Your Survivor Benefit Plan Option at Retirement
File photo

All pension plans offer a version of a survivor plan. It ensures a beneficiary continues to receive a part of a retiree’s income if the retiree dies first.


In the case of the Survivor Benefit Plan (SBP) for the uniformed services, the beneficiary receives income for life, supplemented by cost-of-living adjustments (COLA). The amount of the SBP benefit is adjustable based on the amount of retirement income covered by SBP. The benefit is always 55% of the covered amount of retirement income. The premium is 6.5% of the covered amount of retired pay.


Many balk at the premium. You pay 6.5% to ensure the beneficiary receives 55%. Typically, three or so years of benefit payments cover the total premiums paid.


[RELATED: More Financial Resources From MOAA]


Without the survivor benefit, some beneficiaries will be in financial distress. We know. We hear from them.


Where will your beneficiary get income after you die? Service retired pay stops. VA disability compensation stops. Employer income stops.


The Social Security survivor benefit, prior to retirement benefits, is available at age 60 or when there are minor children. The greater Social Security retirement benefit goes to the survivor. If your death is service-connected, there could be VA Dependency and Indemnity Compensation (DIC).


Do you have enough assets, even if you die early? Do you have enough life insurance to provide a lifetime income? Will your survivor(s) have enough to maintain their standard of living?


To answer these questions, and others, you need a plan, projections, and specialized money management. MOAA members can access several publications with more guidance on financial and survivor issues. Get more information, and learn more about MOAA’s other financial services, here.


Join MOAA Today 

Not a member of MOAA? Premium and Life members can consult our financial staff for education and consumer advice.


Already a MOAA member? MOAA has more than 400 chapters around the country. Get involved in your community by finding the one closest to you and joining today! 


Join Today Join a Chapter

About the Author

Lt. Col. Shane Ostrom, USAF (Ret), CFP®
Lt. Col. Shane Ostrom, USAF (Ret), CFP®

Ostrom is MOAA's former Program Director, Financial & Benefits Education/Counseling