This is a guest post from my good friend Daniel Kopp at Wise Stewardship Financial Planning. Daniel and I have talked extensively about the struggles with the Survivor Benefit Plan (SBP) decision, and he has decided to offer a special financial planning package just for this oh-so-important choice. Because I believe so strongly in the importance of getting the SBP decision right, and because I trust Daniel’s integrity, I asked him to launch his new product here at my blog.
The Most Important Financial Decision of Your Life
For many military retirees, the Survivor Benefit Plan (SBP) is the most important decision of your financial life. It can also be among the most confusing, emotional, and uncertain. In almost every case, you must make a one-time irrevocable decision that will have lasting impacts for decades. And, you have to make that decision with all the unknowns that the future holds.
Frequent readers of Kate’s blog posts know she has written quite a bit about SBP, and with good reason. This is a critical financial decision worth hundreds of thousands (potentially millions in some cases) of dollars over the course of your lifetime and that of your beneficiary(ies)!
For the military spouse though, this is more than just a financial decision. Aside from the long-term financial impact, it’s a good thing that the Department of Defense (DoD) requires spouses to sign off if the military member declines SBP. Given the career and other sacrifices that most military spouses make on behalf of their spouse’s military career, there is rightly an emotional aspect that should not be ignored. A military spouse’s investment ought to be considered as a major contribution that helped earn a military pension.
Good Help is Hard to Find
While most service members and their spouses may have heard about SBP, learning about it takes on a whole new sense of urgency when it comes time for your own decision. Everyone should take advantage of the information presented in their Transition Assistance classes, read what Kate has written, check out my friend Forrest’s ebook all about the SBP, do your own research with the info provided by the Defense Finance and Accounting Service (DFAS) and the DoD Office of the Actuary, and talk about this with your spouse.
Even with all of that information, it can still be overwhelming. All the necessary information is available from government sources. However, when you try to research it online, it can be difficult to piece together due to how spread out the information can be. You probably have heard a variety of opinions from others who already made the SBP decision and there are a lot of thoughts about the best approach to making a decision. Your situation is unique and different, so be careful making a decision based upon someone else’s thought process.
For those that seek an outside perspective from a financial planner, unfortunately there’s not really anything comparable to SBP in the insurance industry, so it’s hard to find civilian references or financial planners that can help you determine whether it’s right for you. Instead, you may find an aggressive salesman motivated by getting a commission wanting to sell you a big insurance policy, whether or not that may be the right choice for your situation.
There’s Got to be a Better Way
I saw the sparse and scattered information from DFAS, DoD Office of the Actuary, the Transition Assistance program, and saw people like Kate trying to fill the education gap to help empower good decisions. On many occasions, Kate and other military personal finance bloggers have also mentioned this need to have a service to empower military retirees and their family to make a confident, informed decision about SBP. So I decided to do something about this.
I’ve created a custom Survivor Benefit Plan Analysis to help you look at your unique situation, evaluate all the financial and emotional variables, act as an impartial third party to help spouses talk and think through their feelings together, and ultimately empower you to make the best decision for your future.
Evaluating SBP Considerations
For those soon-to-be retirees cramming to learn about SBP, Kate has lots of great articles to get fully familiar. Once you understand the program, you have to look at how it applies to your specific situation. These are the major considerations we would look at together:
- Examining income differences and needs with military transition to civilian careers
- Exploring career what-ifs for both spouses potentially seeking new employment opportunities
- Comparing SBP coverage to term life insurance coverage over your lifetimes
- Determining insurable needs, including income replacement, final expenses, debts, emergency funds, and future savings goals such as children’s education, caring for aging parents, gifts to charity, legacy funds, or personal goals
- Modeling how much income life insurance could provide vs. SBP
- Calculating your timeline to reaching financial independence/full retirement based on your past and future savings, with or without SBP
- Evaluating your future financial liquidity requirements
- Assessing longevity risk (the chance that you might live longer than your money will last)
- Considering health and family situations including looking at how most women are living longer than men on average
- Factoring higher healthcare costs in old age, and whether they mean more need for income in later years
- Working through the emotional and risk tolerance considerations, especially for the surviving military spouse
- Providing a neutral place with an impartial third party for both spouses to talk about and share their feelings
- Answering any and all related SBP questions you may have
- And more!
The most important thing to understand is that all aspects of the SBP decision are made when the service member retires. With very few exceptions, any election made at retirement is irrevocable (so choose wisely!). If married (or if directed by a divorce decree), the spouse is required to agree with the service member’s SBP choice to elect anything less than full SBP. Waiting to research and make the decision at the last minute makes a stressful decision even more difficult.
I’ve Created a Custom Evaluation Process Just for You
Using my unique and very personal experience as a widower myself, I can also better help you and your spouse understand the emotional components of this decision. It isn’t only about the money, but at its very core is providing and caring for the spouse and family through a final gift of love. I know from personal experience that having these what-if discussions and planning wisely ahead of time can be a great help to your loved ones in the future.
As a fee-only, fiduciary financial planner, I’m only working on your behalf and in your best interest 100% of the time. There is no bait and switch or trying to earn a commission selling you something. As a boutique, independent financial planning firm, we are able to develop custom processes for your unique situation. We aren’t working for anyone else, just you.
As a veteran with almost nine years on Active Duty as an Air Force officer where I also volunteered as a financial counselor, I’ve seen and experienced first-hand the challenges of military life. I’m now able to use these vast experiences to help my clients navigate the challenges of the busy military life, get the most out of your hard-earned benefits, and help you achieve your goals.
It’s so important to think through this critical financial decision as SBP has impacts that will last the rest of your life. Although it may feel stressful and challenging right now, I can help you gain confidence and peace of mind to fully understand your long-term needs and all the factors to consider. We will examine all the aspects of your financial life that SBP impacts, so you can stop worrying about your decision. Based on everything we look at together, I will give my recommendation based on your specific scenario and what I believe is the best option for your situation.
What You Can Expect
We start with a free, no-obligation consultation offered first to answer any questions, ensure we are comfortable working together, and help you understand the process.
The Survivor Benefit Plan Analysis is offered for the straightforward, transparent pricing of only $290. You and your spouse will get a one hour virtual meeting with a fee-only financial planner going over your unique situation, reviewing the data you previously provided through a questionnaire, discussing goals, attitudes towards risk, and answering any and all SBP related questions. Following our meeting, you will get a full report of the SBP analysis with a summary of everything we discussed as well as an action checklist for you to confidently implement on your own.