RE: http://www.military.com/opinio...15202,204849,00.html
I believe that guys are fools for not taking up SBP
I have unfornately I didn't take it up until I got
married two years ago. I just turned 69 years of age this month.

Read the article early this morning, was really refreshing to see the benefits of SBP spelled out. Of course we decided to not turn it down, I've never regreted that choice of 16 years ago.
During the twilight of my my career I heard more naysayers regarding the SBP benifit. Could not understand why, maybe it was for those that declined it more attaractive to throw their money into a whole life policy, mutual fund, or some other money making tool.
Yet they failed to grasp that there were too many risks in any of those, even with such a rosey economic outlook.
Odd, how things change as they did last year. It's good to have investments, but you'd think you would want to protect the investment you & your spouse put into those years Serving. There is no other tool to protect your portion of what you've earned, to pass on to your surviors when you die. Or if I'm fortunate to outlive my contributions, or if there is no survior for it, still it's money well spent.

Why won't the people that handle the SBP let me enroll my wife. I have been trying to get her enrolled for 2 years and BECAUSE I didn't sign her up in the "alloted" 1 year time period (of which I was never told I had ONLY one year to sign her up) She's out of luck UNTIL they have a "open" enrollment period. My senators won't even help me.

Thanks !!
Stephen

Let's see - 7 years equals 84 months. If the widow collects $401,897 in 7 years, that's $4784.49 per month. Her poor husband was only getting $2000 per month. Someone better re-check their math on this one.

When you retire after 20 years of service, have five children, no degree and the commercial world considers your 20 years experience worth nothing b/c you don't have a degree, you can't afford to have even that much taken out of your check. I don't think that everyone is foolish for turning it down. I respect my father greatly for considering the immediate needs of his family and his wife. It bothers me that they gave him one chance to take it or leave it. Still, it's a great program if you can afford it.

DIC is better and you don't have to pay premiums...

It is true, that SBP is not explain in layman terms where we could understand exactly what it is. At the time I retire from the Navy, it was at it's high point in the late 90's were in the financial business where everyone was making money. And I was just getting into the financial business at the time, and I was advised by my so call up line that I should invest my money into things like VUL's, "Variable Universal Life Insurance", which at the time had a good return. But as I learn later on that a Variable Product has no guarantees of any type of returns, unlike a fix product. So I was told how the SBP, was not a good deal. But I have since learn that Annuities are a good deal, that is if you have either a Fix Annuity, or a Index Annuitie, which is also a Fix Product. With a Fix Product you are guarantee a certain percentage on you returns, no matter how the market fairs. And if you did not elect to get the SBP, you can still purchase and Annuity, and start saving for retirement for both you and your spouse, and if you pass before she does she can still collect, it just depends on what kind of plan you elect to set up for you and your spouse. Just do your homework and sit down with an advisor, to discuss your options. Just remember it's never to late to start.

SBP was the first stop my wife and I made after getting that blue ID card. Makes me wonder if many of these recent retirees have divorced and remarried and don't want the ex to try and muscle in on the benefit upon the retiree's death. Rules aren't always made clear on that situation. I have life insurance but the SBP is indexed to inflation just like the regular retirement pension.

That math in the article is off. Max benefit is, what, 55% of monthly retirement amount? 55% of 2000 = 1100 X 84 months = $92.4K

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Reply

Garbage, Anyone who takes SBP should learn how to operate a calculator. The only group that this is appropriate for is the non-insurable retiree. (sorry folks the rest of you were taken for a ride) Math. Assuming a retired E7 pays 143.00 a month his spouse would get a 10890 post tax payout a year assuming a 25% tax bracket, total possible collection is 393K for a collection of 36 years age 72. The net cost is 1716.00 a year. The same person could get a 35.00 a month term life insurance policy 20year, 800K payout non-taxable for 420.00 a year. OH and the spouse/family gets all the money up front not over a 36 year policy payout. Sorry Folks SBP is another sale by the Recuiters, painting one picture and ignoring the FACTS!~

SBP is great if the service member kick off first. If the wife kicks off fisrt what does the servide member get. Nothing.

SBP is a terrible product unless you cannot get life insurance. Your are much better off to take the SBP payment and get term life insurance and then invest the rest in good growth stock mutual funds. This way your spouse will have much more then what SBP gives out, plus if your spouse dies before you - the investment goes to your dependents and the life insurance can be give it to another family member. With SBP when you die it is gone - nothing for anyone.

In 1993 I signed up for SBP for my X wife because I was told I had to unless she would sign paperwork saying she didn't want it.
She has remarried and according to the rules she would not be eligible to receive anything. I am told there is no way to stop this reduction in my retirement check. I am afraid that even if she were to die I would still have to pay this deduction.

Interesting article – I can tell you why we turned down SBP - Primarily we are super “savers” and feel that we can better invest that money than SBP can. Secondly, we have no reason to trust that when/if we actually needed to use that benefit the government would have kept their word and the benefit would still consist of what it did when we paid for it. We have a whole lot of experience with our bennies being tampered with, you see. Thirdly, this benefit would only benefit me as a surviving wife, if I am a lonely widow. I know the chances are nearly nil, but if I ever found someone as fabulous as my hubby to keep me (as a widow) company in my old age, I could either just shack up with my companion or kiss my SBP good-bye. We chose to purchase very large life ins policies for both of us. If you checked, you would likely find that most of the folks who opted for SBP never had any more life insurance than SGLI – or even opted out of SGLI. You hear the sad stories all the time and probably wonder what the heck they were thinkin’…. We have always had my hubby (and I) well insured (USAA) and what we added after retirement to make up for the SBP opt-out was nominal (and the payback difference substantial). I was a young naïve Army wife once, a long, long, time ago. 20 years of experience with the military/government way of doing things have taught me to be very self-sufficient. Hope that SBP option works out for the SBP participants when they try to live on the very small percentage of their hubby’s retirement pay after all the restrictions and fine print have been applied – I’ll rely on our own financial decisions & investments, thank you very much.

The trouble with studies is unless you understand the formula's used the results can be wrong. "Liars figure and figures lie" The biggest issue is the assumed inflation rate which drives the future COLAs on retired pay. If 3% inflation is assumed the dollar factors in the article are wrong. For one the referenced 38 year old would pay close to $90,000 in SBP premiums to their 70th birthday as the costs would increase with every COLA adjustment. The 6.5% SBP premium would start out around $130 per month and increase to around $340 per month by age 70. If the spouse either dies first or they get a divorce those premium dollars go down a black hole. The biggest issue concerning SBP is that by itself it is inadequate to provide for a surviving family's financial protection. A 50% retirement formula on "over 20" base pay is somewhere around 27% of a service members pay and allowances at the 20 year point (not counting VHA,overseas COLAs or special pays) so over 70% of the former active duty income needs to be replaced to maintain lifestyle once retired. The spousal 55% SBP benefit would provide only 15% of the active duty lifestyle. If the spouse is not a U.S. citizen then there can be the issue of the 30% non-resident alien taxes withheld from the SBP benefit reducing a meager dollar amount even further. The issue is bigger than taking SBP or not take SBP as much as it is WHAT DOES THE FAMILY NEED TO MEET FINANCIAL NEEDS SHOULD THE PRIMARY BREADWINNER DIE and what have they done to put financial assets in place to meet those needs? That should possibly involve different forms of life insurance, the military TSP, Roth IRAs, normal savings and investments, available DIC benefits and after the spouse reaches age 60 various forms of Social Security benefits. If there are very young children or if their is a disabled child regardless of how financially set the family is they should take SBP for children which has a much lower premium cost. In the case of the disabled child the benefit does not expire. If the service member is almost at the point of retirement and has not done anything preparing for their family's financial future then SBP is probably a non-brainer. Gary Braden

The biggest problem I had with it, is the money goes back to the treasury, if your spouse dies before you do. How is that a great deal??? I believe the country got enough out of me. Also, for the coverage it gave, the VGLI cost less up to the age of 75. Even my wife said this was crazy!

Ben

SBP is the biggest rip-off I was ever talked into. I regret the fact that I paid on it for 2 years before someone thankfully showed me the math. For over $100 less I am getting a larger coverage and it will be paid in lump if anything happens to me. The house will be paid off, all the bills, and money left over to boot.

Let's jump ahead to paid-up SBP. Many of us (perhaps thousands) who retired in the 1970s and elected SBP were told by DFAS during the paid-up SBP dispute period that we didn't enroll until 1982 (which seems to be a magic date for DFAS) and must keep paying premiums until 2012 instead of 2008. We who disputed this are still being told that DFAS records are correct and we are all wrong. All they do is read computers and give very good customer non-service. As for me, my wife and I are 74 years old and when I die, I doubt she will get her money back. Buy term life insurance instead. Incidentally, I'm retired Navy (the service that does a bad SBP promotion job).

Do you notice how many "new" members are posting their opinions in this post? Anyway, to the point. The Family Support Advisor and I (I was their IT support) would go round and round on this subject. He supported SBP on the grounds that most retiring military members are fiscally irresponsible. I on the other hand ran the numbers, and came up with a solid plan for my survivors, not just my wife. You see, my children would not receive any of the SBP if my wife expires before I do. I asked my wife, “Would you rather have $1000 a month or $500,000 all at one time when I die?” My wife is an educated woman and smartly replied, “I’ll take the $500,000, and it’ll pay for all those cruises I can take to find a new husband!” The cost? Less than SBP premiums until I reach the age of 65. Let’s face it; who ever did the math (as stated below) was on legalized drugs. There is no way she would get $400,000 in seven years of SBP payments. 6% of $2000 is $120 a month. That buys a LOT of life insurance.

One issue that should be a consideration, though no-one has yet "wanted to go there", is the question: "HOW STRONG IS YOUR MARRIAGE"?
(See "daliere's" post above) I was in a troubled marriage prior to retirement, and thus, declined SBP...and just as I feared, she asked for a divorce 2 years after retirement. Declining SBP has saved me thousands of my hard earned $$$. I'll let the new husband worry about their financial future.

Thanks guys! Your math works just like mine. I don't see how they get these fantasy numbers. A 30 year level term insurance product pays higher every time and I can stop it whenever I want. For enlisted folks . . .I see no value in protecting only $1000 a month. That is what my benefit would be to the spouse.Period. Being locked into contributions . . .is a stinker. Marriage. I thought I had a good one, one day she just ups and leaves .. .so glad I did not take SBP.