The Survivor Benefit Plan

The short version

Military retired pay stops when you die. The Survivor Benefit Plan (SBP) is the government annuity that keeps paying a portion of it to your spouse or children after you are gone. At retirement you decide whether to enroll and at what level, and it is one of the most important money decisions you will make.

SBP can pay an eligible survivor up to 55% of your chosen base amount, for life, adjusted for inflation.

What SBP pays, and what it costs

You pick a base amount (up to your full retired pay). The survivor annuity is 55% of that base amount. You pay a monthly premium out of gross retired pay, which lowers your taxable retired pay. For spouse coverage, the premium is a set percentage of the base amount you elect.

The benefit

• Up to 55% of your base amount, paid for the survivor's life.
• Inflation-adjusted with cost-of-living raises.
• Backed by the government, not a market product.

The cost

• Premium is a percentage of the base amount (commonly cited at 6.5% for spouse coverage, confirm current figures).
• Paid from gross retired pay, so it is pre-tax.
• Reducing or declining spouse coverage requires spouse consent.

SBP is inflation-protected, lifelong, and government-backed. Comparable private coverage for a healthy lifelong annuity is hard to match.

Source: militarypay.defense.gov; DFAS

Why this decision is hard to undo

You make the SBP election at retirement. If you decline or reduce spouse coverage, your spouse must consent in writing. There are only narrow windows to change your mind later, so treat it as close to permanent. Many retirees compare SBP against a term life insurance policy; the right answer depends on your health, your survivor's needs, and how long protection must last.

SBP vs. life insurance

Term life insurance is cheap while you are young and healthy but expires, and lifelong (permanent) coverage is expensive. SBP is a lifelong, inflation-adjusted annuity that does not care about your health. Some families use a mix: SBP for the lifelong floor, term insurance for the high-expense years.

Weigh these

• Your survivor's lifelong income needs.
• Your health and insurability.
• Whether you also have VGLI or a private policy.

SBP and the VA survivor benefit (DIC) can interact. Get current guidance before you decide.

Source: Military OneSource

Do this now

1. Model the premium and benefit with the SBP worksheet before you retire.
2. Talk it through with your spouse; their consent is required to reduce or decline.
3. Compare against any term or permanent insurance you hold.
4. Ask a counselor at Military OneSource or your retirement services office.

FAQ

How much does SBP pay?

Up to 55% of the base amount you elect, for the survivor's life, with inflation adjustments.

Can I decline it?

You can decline or reduce spouse coverage only with your spouse's written consent. Otherwise spouse coverage is the default.

Is the premium pre-tax?

Yes. Premiums come out of gross retired pay, which reduces your taxable retired pay.

Should I just buy life insurance instead?

Maybe, maybe not. SBP is lifelong and inflation-adjusted and ignores your health. Compare carefully, and consider a mix.

Sources & links

• DoD, Survivor Benefit Plan overview: militarypay.defense.gov
• DFAS, SBP costs: dfas.mil
• Military OneSource, The Survivor Benefit Plan: militaryonesource.mil