SBP vs No SBP â The Survivor Benefit Plan Decision
The Survivor Benefit Plan is one of the biggest retirement decisions military members make. Learn how SBP works, what it costs, what your survivor receives, and how to decide.
â ī¸ For educational purposes only. Not official DoD or DFAS guidance. Verify with your branch HR, ARPC, or a military financial advisor.
What Is SBP?
\nDoD-administered annuity that continues a portion of your retirement pay to an eligible survivor after you die; up to 55% of elected base amount; inflation-adjusted annually with COLA; premiums deducted from retirement pay pre-tax (reduces taxable income).
\nHow Premiums Work
\n6.5% of elected base amount per month; example: $2,000 retirement pay, full SBP elected = $130/month premium, survivor receives $1,100/month (55% of $2,000). Can elect less than full base amount to reduce premium. Pre-tax deduction reduces federal tax burden.
\nWhat Your Survivor Receives
\n55% of elected base amount; COLA-adjusted (matches retiree's annual COLA increases); continues until survivor's death or remarriage before age 55; if survivor remarries after 55, SBP continues.
\nRCSBP for Reserve Retirees
\nReserve Component SBP; must elect within 90 days of receiving 20-year letter (not at retirement); Option A: no coverage until age 60; Option B: deferred â coverage begins at age 60, lower premium; Option C: immediate annuity â coverage begins when retiree dies even during grey area; missing the 90-day window = Option A by default.
\nSBP vs Life Insurance
\nSBP: guaranteed annuity, inflation-adjusted, lasts survivor's lifetime, premium ends after 30 years/360 months (SBP-paid-up provision). Life insurance: lump sum, flexible, may lapse if premiums stop, dependent on investment of proceeds. Not either/or â most military financial advisors recommend both, with SBP as the floor.
\nThe DIC Offset â Was Eliminated
\nHistorically, Dependency and Indemnity Compensation (VA benefit for survivors of service-connected death) offset SBP dollar-for-dollar â called the 'widow's tax.' The SBP-DIC Special Survivors Indemnity Allowance (SSIA) phased out the offset completely by January 2023. Survivors now receive FULL SBP AND full DIC simultaneously.
\nThe 30-Year Paid-Up Provision
\nAfter 30 years of SBP premiums AND retiree is age 70+, SBP coverage continues at NO FURTHER COST. Premium stops but annuity remains. Important for long-career retirees.
\nWhen SBP Makes Strong Sense
\nYounger spouse (20+ year age gap = decades of potential annuity payments), sole-income household, service-connected conditions that may reduce lifespan, limited other assets or life insurance, spouse unlikely to remarry.
\nWhen to Consider Alternatives
\nLarge life insurance portfolio already in place, spouse has own substantial retirement income, significant investment assets, both in good health with other financial plans.
\nThe Bottom Line
\nThis is one of the most personal financial decisions a military member makes. The math alone doesn't tell the whole story. Work with a fee-only financial advisor who understands military benefits. MOAA, the CFP Board military advisor network, and installation financial counselors are good resources.
\nFrequently Asked Questions
\nCan I change SBP after retirement?
\nGenerally no â except during open enrollment periods or qualifying life events like divorce or death of beneficiary.
\nWhat if I'm not married?
\nCan elect child-only coverage, former spouse coverage, or 'insurable interest' â someone who would suffer financial loss from your death.
\nDoes SBP cover health insurance for my survivor?
\nNo â SBP provides income only; TRICARE for Life is separate.
\nWhat happens to SBP premiums if my spouse dies before me?
\nCoverage suspended, premiums refunded â can reinstate if you remarry.
\nIs SBP worth it if I'm healthy and have other insurance?
\nPersonal decision â the 'breakeven point' analysis matters but so does longevity risk and inflation protection.
\nOfficial References
- DoD SBP
- DFAS SBP
- DIC
- RCSBP
- MOAA SBP guide