The Survivor Benefit Plan: Make an Informed Decision


Each year retiring servicemembers are asked to decide whether or not they wish to participate in the Department of Defense's annuity program, known as the Survivor Benefit Plan. The following information on SBP benefits is intended to help you make an informed choice about the program.Over the last few years two major changes have occurred which have made the SBP a very attractive way to ensure the spouses of military retirees have an annuity to fall back on when the retiree passes away. The first was the removal of an offset, or limitation, that caused a steep drop in SBP benefit payments when the surviving spouses reached age 62. This "Social Security Offset" was phased out in April of 2008. Under SBP, a retiree forfeits 6.5 percent of "covered" retired pay each month in premiums. In return, when the retiree dies, the surviving spouse or designated beneficiary will get an annuity equal to 55 percent of covered retired pay. Until the offset was phased out, surviving spouses who reached age 62 saw annuities fall to as low as 35 percent of retired pay.

The removal of the offset added approximately $150,000 to $250,000 to the lifetime value of SBP for a typical officer retiree. The added value range will be lower than that for a typical enlisted retiree but it is still a richer benefit.The second change came in October of the same year when the "Paid-up" law kicked in. This law allows participants to stop paying premiums at age 70 if they have made a minimum of 360 payments. Something else to remember is that although SBP premiums rise annually, they are tied to increases in retired pay; more importantly, SBP benefits rise proportionally. Whole life insurance premiums may not rise, but neither does their value.It is important for military retirees to learn more about the Survivor Benefit Plan before making their decision -- it should also be noted that the military spouse has a say in the final decision, and a spouse's signature is required if the servicemember chooses the SBP plan. To learn more about the Survivor Benefit Plan, follow these links for details of the plan's benefits and limitations.

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