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Old 04-27-2010, 06:44 PM   #1
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Hello, I'm a long time visitor (about 3 years) and have loved reading everyone's stories and advice over the years. I'm 40 and married (spouse is 45) and unfortunately we aren't prepared in any way for retiring soon but hoping to make some big changes soon to get there. Lot's of mistakes in the past with money, bad choices, too much spending. If only I knew then what I know now!

I do have a question. My husband is in the military and retiring in a few months. We have to make a decision on the Survivor Benefit Plan soon. It's almost automatic that everyone takes it but I'm wondering if it's a good deal or would it be a better deal to just have life insurance.

SBP would cost us around $125 a month and leave me with $1072 before taxes every month should my husband die.

Life insurance policy for $500,000 would be around $75 a month.

Thoughts?
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Old 04-27-2010, 07:04 PM   #2
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Hello TXgirl,

I don't have an answer to your questions. But just wanted to welcome you for posting.

Don't worry about the feeling "If I only knew then what I know now". I find myself saying that again and again in life.

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Old 04-27-2010, 07:16 PM   #3
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For us the answer was yes.

Your $125 a month is buying a cola'd retirement of $12,852. Your $500,000 insurance policy would provide you $20,000 in cola'd savings. However, the insurance is most likely decreasing term i.e. the $500,000 will go down with age, or increasing premium. Also one is dependent on you investing and the results of those investments and the other is backed by the government. (some may not see that as an advantage right now)

Anyway, I have seen studies that show the insurance route is the way to go, (don't know where those are now), but for us it was simpler to do SBP. In fact when I retired, we turned down SBP, and added it during an open enrollment.

I doubt this helped much, but we really don't miss the SBP coming out and it stops at age 70.

I did not read all of this site, but it may help. Not sure if they are not just trying to sell something.
http://www.accessmylibrary.com/artic...-vs-joint.html
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Old 04-27-2010, 07:43 PM   #4
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If you do not work outside the house it is a no brainer to get the max and some amount of term insurance. Otherwise, it may make sense to combine some amount of SBP with some term. I would check out the Army Airforce Mutual Aid Association (AAFMAA-Home) or the Navy Mutual Aid Association for term insurance.

Welcome to the boards.
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Old 04-27-2010, 08:23 PM   #5
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Welcome to the board. To follow up on jimnjana, here is the link to Navy Mutual Aid Association Navy Mutual Aid Association Life Insurance, Annuities, Benefits for Military Sea Services

I have been with them for years and very satisfied.
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Old 04-28-2010, 07:00 AM   #6
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Where did you get your estimate for SBP done ?
I went to this website https://w11.afpc.randolph.af.mil/Ret.../EOSBPFRM.ASPX

and for a member drawing 1200/mo the cost is about $65/mo ?
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Old 04-28-2010, 11:46 AM   #7
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Thanks for the replys and the links!

The estimate for the SBP came from a meeting with the person at the base in charge of discussing the SBP program. My husband will be drawing more than 1200 a month in retirement.
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Old 04-28-2010, 08:36 PM   #8
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Quote:
Originally Posted by TXgirl View Post
The estimate for the SBP came from a meeting with the person at the base in charge of discussing the SBP program. My husband will be drawing more than 1200 a month in retirement.
The premium for SBP is 6.5% of a military retiree's selected base amount (anywhere from $300 up to the full retired pay). When the retired service member dies, his/her beneficiary will receive 55% of the base amount that he/she selected when they signed up for SBP.

So, for example, if your husband's pension is $1,200/month and he selects that as his base amount, his monthly premium will be $78/month. If he dies before you, you will receive $660/month in a COLA'd pension (using the $1,200 figure above) for the rest of your life. I'd suggest that you take a look at the military's website dealing with SBP: Spouse Coverage There is a lot of useful information contained there.

Some of the up sides of SBP--premium payments are deducted before taxes so the retiree's monthly taxable income is less. Also, once the military retiree has paid his/her monthly SBP premium for 30 years (360 total payments), they are considered "paid up" and no longer have to pay the premium. Down sides--if the retired service member dies and the SBP beneficiary gets remarried before he/she turns 55 then SBP payments will stop.
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Old 04-28-2010, 08:48 PM   #9
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Quote:
Originally Posted by TXgirl View Post

Life insurance policy for $500,000 would be around $75 a month.

Thoughts?
Why do you want life ins? My thought on life ins is to replace needed income (a spouse taking care of children would be considered a needed income) .

Is the $900/year term ins? I would look at term ins. if you need ins.
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