Thanks, Dtail! I've known Steve for a few years and helped review the military aspects of NewRetirement's analysis. We finally got around to recording an interview.
There might not be an exact translation between what he's doing now and what's available in the Reserves, and it might not be in a location he wants, but there'll be a billet.
It doesn't have to be Navy Reserve-- it could be any of the service's Reserves who are interested in his skills, or the National Guard unit in his state. (The process of going from active duty to Reserve/Guard status begins by visiting the recruiter.) Guard units tend to have more armories closer to home, and Navy Reserve units tend to be farther away than the other services. Even though my daughter lives on the coast, she's still facing a two-hour drive to the nearest unit for the monthly drill weekend.
There is, but the Reserve Component Survivor Benefit Plan is not necessarily a good product for everyone.
People tend to compare SBP to term life insurance as if they're equivalent and mutually exclusive. The answers are actually one, or the other, or just for the kids, or both, or neither.
If your DIL decides that an inflation-fighting survivor annuity is still a good idea, then SBP is the cheapest (and most reliable) inflation-adjusted annuity available. (The federal government subsidizes the premiums and you can pay in 360 monthly installments.) However RCSBP has an additional premium (the Reserve Component Premium) which might make it prohibitively expensive when it has to be paid for the same 360 months.
In addition, families might only want insurance for a limited number of years or paid out as a lump sum. That's a different analysis than managing a COLA annuity, and the product is term insurance.
People who've reached financial independence might not want either product. My spouse and I both have enough income & assets if the other dies, so when we retired then we declined SBP and RCSBP on each other. We'd rather have the money to spend on each other while we're both still alive.
The attractive trap about RCSBP is that it has an option to provide "free" coverage between the year the Reserve/Guard servicemember applies for retirement and the date that the pension starts. Someone could reach 20 good years and file for retirement in their late 30s or early 40s, opt for RCSBP with an immediate payout at their death, die right after signing the papers, and their spouse would have an inflation-adjusted life annuity.
The trap part is that the retiree still has to pay a couple years of SBP premiums after starting their pension at age 60, although they can cancel the SBP policy between the 25th and 36th months of payments. After that opt-out window they have to pay until "age 70 and 360 monthly payments", which is effectively the rest of the Reserve retiree's life. Even if the Reserve retirees cancel the SBP part at the 25th month, Reserve retirees still have to pay the Reserve Component Premium for effectively the rest of their lives.
The federal law also has a bunch of arcane exceptions, deadlines, and exclusions for divorces, spouse deaths, remarriages, and additional children. I get sad e-mails every month from someone who thought they were covered but... they were not.
Having said that, RCSBP can be a bargain for families with adult disabled children (the annuity can be paid to a Special Needs Trust), or for minor children (coverage will lapse when the kids turn 18, or age 22 for full-time students). It might also be a good choice for disabled vets, especially those with 100% VA disability ratings who might not even be eligible for commercial term insurance.
Anyone fortunate enough to be eligible for SBP or RCSBP should hire a fee-only CFP to review the coverage (and exclusions) and pricing (including the Reserve Component Premium). That CFP should already be familiar with the programs, because you don't want to pay them to learn about SBP on your dollar. You can also learn about the progams from the source reference: the Financial Management Regulation (DoD 7000.14-R) Volume 7B chapters 42-46, 49, and 54. The links start here:
https://comptroller.defense.gov/FMR/vol7b_chapters.aspx
Here's a very basic overview of the program and its issues:
https://the-military-guide.com/the-reserve-component-survivor-benefit-plan/
You can also buy an eBook with an extensive financial analysis of SBP from Forrest Baumhover, a CFP (and military retiree):
https://www.amazon.com/Military-Transitions-Guide-Survivor-Benefit-ebook/dp/B01EPB5H1Q/
Again... for most military retirees, term life insurance is the least expensive option. SBP is a niche product that's not necessary for most. Don't get suckered by the attractive idea of an inflation-adjusted survivor annuity.
I would give him a copy of Nords book when he gets his wings. It has some good info. I referred my son to the chapter regarding the pros and cons of buying a house, when he was thinking about that. (He decided against, but did not waste the $, fully funded his TSP and Roths for himself and DW instead, as well as padding the savings account.)
