APRIL 13, 2023 – Planning for retirement is exciting, but it can get complicated quickly. Trained Retirement Services Officers (RSOs) are ready to give you the information you need to make informed decisions. Make sure to bring your spouse to all retirement planning sessions so that you both hear the same information. Sometimes spouses hear things differently or focus on different parts of the brief that are important to decision-making.
Should you take the Survivor Benefit Plan (SBP) for a child or children? They will age out, so why bother paying more money for premiums?
Here are some considerations:
- Child SBP coverage is relatively inexpensive.
- Spouse and Child coverage – In most cases, child(ren) cost is less than one dollar because they are the secondary beneficiary. As the secondary beneficiaries, children will receive the SBP annuity only if your spouse dies or remarries prior to age 55.
- Child only coverage – Child cost increases to a few dollars because they are the primary beneficiary.
- See below for sample SBP monthly premiums for a 44-year-old Soldier, 41-year-old spouse, and youngest child.
- For a base amount of $4000, spouse only premium is $260, spouse and children premium is $260.36, child(ren) only is $7.20, and the monthly annuity is $2200.
- For a base amount of $3000, spouse only premium is $195, spouse and children premium is $195.27, child(ren) only is $5.40, and the monthly annuity is $1650.
- For a base amount of $2000, spouse only premium is $130, spouse and children premium is $130.18, child(ren) only is $3.60, and the monthly annuity is $1100.
- Declining Child SBP at election prevents coverage for children in the future.
- What if your family is not done growing? You may have another child, become a legal guardian of a grandchild, or adopt a child.
- What if your child becomes incapacitated? Child coverage will remain at the same rate and the child annuity will pay out to an incapacitated child if they remain unmarried and incurred the condition that makes them incapacitated while they were an eligible child.
- Child coverage is for when your child really needs it.
- Eligible unmarried children receive the SBP annuity until age 18 or 22 for full-time students.
- If the unmarried child becomes permanently disabled and incapable of self-support because of a mental defect or physical disability while they were still eligible to receive SBP coverage, then the child is covered for life or until they marry.
- Premiums adjust when child(ren) loses eligibility by aging out or marrying:
- Spouse and Child(ren) – Changes to Spouse, Child(ren) suspended. You will only pay for Spouse Premium.
- Child(ren) Only – Premiums stop.
- If you gain a new eligible child, the coverage resumes and premiums will start again for that coverage.
- Special Needs Trust (SNT) option for the SBP annuity for incapacitated children:
- SBP annuity placed into a SNT is not considered income and therefore shelters it from other benefits the child may receive based on their income.
- The SNT can be set up at any time: at Soldier’s retirement, after the Soldier’s retirement, and after the Retired Soldier’s death.
Visit the SBP Premium Calculator (https://myarmybenefits.us.army.mil/Benefit-Calculators/SBP-Premium-Calculator) on the MyArmyBenefits website to run your SBP premium cost and annuity. This tool will give you an estimate specific to your family situation.
Talk to your Retirement Services Officer (https://soldierforlife.army.mil/Retirement/rso?maps=all) as you consider what is right for you and your family situation.
Story by Patty Cruz
HQDA Retirement Services Office