Military SBP (Pension) or Life Insurance?
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- Опубліковано 29 вер 2024
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Thanks Josh. I'm viewing this 4 years after you made it...just recently found your channel... Anyway, I made my decision to take SBP 20 years ago, haven't yet had to use it (obviously), but I feel it was a good decision for my situation. I knew the SBP was the safest option, it would adjust upwards with inflation (benefits & premiums), and my wife would be guaranteed the steady stream throughout her life, etc. I just felt much more comfortable and at ease with this decision, no regrets.
Great video and info. I personally didn’t do the SBP. I explained to my wife that I would get her a $500K term life policy for 20 years for 90 bucks a month and that premium doesn’t change. That takes me to 66 years old by then I figured my house will be paid off, kids are long gone and we’ll have at least a million bucks in the bank. She shouldn’t need anything else. I’m not saying anything negative about SBP but the high premiums that increase with time along with her only getting 55% just didn’t make good business sense to me compared to the term policy and what I can do investing my retirement into a Vanguard index for the next 20 years. Also, you forgot to mention that she can’t remarry so if you go at 50 and your wife of 40 wants to collect that check she’d better date.
I am learning towards that same decision too. I am taking a $ 400K term-life insurance for 20 years in exchange for $67 per month. We will both be 50 years old by the end of that policy. With SBP, I would be paying $120 per month. I am not sure if I am missing something, but a private life insurance is better for me. In this case, even VGLI for 20 years seems better than SBP.
If I were you I'd get 35 or even 40 years of term life. They'll give you the policy based on your health now and you'll be locked in at one premium that doesn't change. Besides, 50 is too young to have your policy end and and too old to look for a new one. I did a 20 year policy because I was 44 at the time and we have a 15 year mortgage.For me it's really all about not leaving her and the kids a mortgage.
But seriously consider getting the most bang for your buck right now. You may be able to get a 40 year $500K term policy for less than 100 bucks a month which still beats the pants off SBP in my opinion.
Exactly the premium is too high for someone who served the country 20 years it is a disservice to the military member.. especially when not that many molitary members serve 20 years first get screwed by the gov cutting their retirement pay in half and then get charged for a high premium -
I took the SBP provides wife with 75% of my pension - it was cheaper than a term policy of $1million as I have pre-existing conditions. $500K was a break even but this is for 20 year term. What happens if I outlive that term and die the next day she gets squat. Also, taking the SBP enables my wife to remain as a member of the retirement plan and my union and still eligible for dental and vision etc... The pro of the term policy is that it's untaxed and can be part of the inheritance.
SBP is probably the worst financial decision I’ve ever made. I’ve been paying $200 a month for the last 20 years and still have another 10 years to go. When you retire, the military sells it hard. My wife’s health is horrible and mine is great. I now have $2 million in a 401k. I question the need to continue the SBP. I’ve been investing like crazy since leaving the military. Investments in my self directed 401k are doing well. My portfolio went up $100k in a 30 day period last month.
I thought if you opt in you can't opt out..hmm
@@chrislehmann6240 have to opt out within first 3 years
Question? If the service member dies before the 360, does the spouse still receive the monthly payment?
Have you done this comparison to term insurance?
A $500K term life insurance policy for me is $33 per month. When I pass away, my wife invests the money in a mutual fund. If that earns $10%, my wife gets $50,000 per year and never reduces the $500K. When she passes, the kids inherit the money. SBP costs more per month and ends when the spouse dies. The kids can't inherit any of it.
Exactly - I did the same thing, declined SBP (married no kids); and got 2 Term policies
What company did you go with for Life Insurance
I signed up for the SBP program when it was offered to me around the time I turned 40 and was still in the Naval Reserve ("Heck, I'm not going to live that long... might as well sign up for it anyway!" WRONGO!). Glad I filled out that SBP form as it guarantees that my wife gets 55% of my "annuity base amount" (which is $3.5 more than my actual pension amount, for some reason - go figure!). My pension is based on 3.5 years of active duty and 22.5 years of Reserve duty, so it's not as large as a full-time active duty pension, but it's more generous that I thought it would be. But when you add this tidy little pension to my SS benefits (deferred till I turned 70 in late June 2019), and then you add my wife's SSA benefit she will start up in January next year (had a great interview at the Beaverton, OR SS office earlier this month, BTW - wonderful agent!), we're bringing in as much after-tax cash from the "guv'mnt" as we were when slaving away at our "crappy old (corporate) jobs." Yup... agree with your analysis completely, especially when you factor in inflation, not 4%, but maybe about 2%. (Just hope the DOD is more accurate with its weapons and training than its inflation tables. 👍) Thanks!
I wouldn’t depend on social security to supplement retirement there are talks by the republicans to end it ! The SBP is great plan with one exception the monthly payment is too high a few in the military reach that milestone serving 20 years the government cut their retirement pay in half and then charge them a high fee for SBP? it should be 50.00 a month instead some vets who serve 20 years don’t get disability - also the gov is reinvesting this money into a high interest account . it’s a disservice to those that put their life’s on the line for their country- there are better life insurance out there cost way less with no medical exams and you pull money out ...SBP doesnt !
Josh, The military now requires the wife to sign off on the SBP option they began that in mid 2000s. If she doesnt you are automatically are in the SBP. The SBP is by far the best option. I retired in 2008 from AF Reserve. We have 9 years still to start drawing our pension. I also have a police pension. You have to take care of your wife or husband and make govt pay as long g as possible.
My wife is 9 years younger than me. SPB works for us.
Thanks Josh one of those things everyone should think about.
Great video Josh! Very informative. Great way to compare it to a life Insurance policy👍🏻
Thank you! I am an unmarried Retiree and was glad to hear that I can marry late and hold off premiums until then. I think there may be a rule where I have to live a year after making the election.
Off topic a bit.. have you done a video or an assessment on the VA SDVI program?
Thanks for the video....i literally just found today i have to pay for this....
I can't believe you are actually promoting SBP. It's a terrible plan.
my credit union offered me a life insurance which in fine print seems way better than this..need to do my research
Josh is that 30 years on a reserve pension also ?
Yes. It's 30 years on a Reserve pension, too. As a Reservist, my pension began at age 60. I'll be done with SBP payments on my 90th birthday. I'm one-third the way there.
Yes. Starts at 60 years of age, and you're done paying SBP payments when you turn 90. I have 20 more years to go. 🤣
Hello Josh! My father who retired from the Air Force 30 years ago after 28 years of service opted for life insurance, because he thought it would be a better deal for my mother upon his passing. So he bought a life insurance policy from a triple A rated insurance company. About 5 to 10 years later, the company went bankrupt. He got most of his money back. I wish I got more specifics from him, but felt uncomfortable to ask too many questions. This had a huge impact on my father's decision to continue in his second career. Fortunately, my father loved his second career. My mother recently passed away 4 months after my father. Although my father provided a sufficient retirement plan for my mother, I often wondered why my father chose insurance over the sure thing. Your explanation is greatly appreciated!
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