55% of your retirement pay continues to your spouse after your death. SBP is government-subsidized and COLA-adjusted — understanding it is one of the most important financial decisions you make at retirement.
View Benefits ChecklistThe Survivor Benefit Plan (SBP) is a government-subsidized annuity that military retirees can elect to ensure their surviving spouse (or other eligible beneficiaries) continues to receive income after the retiree's death. It is one of the most significant financial decisions a military retiree makes — and one of the least understood.
SBP provides an annuity of up to 55% of the retiree's gross retirement pay to the designated beneficiary upon the retiree's death. The annuity is adjusted annually with cost-of-living adjustments (COLAs), which is a significant advantage over private life insurance. SBP coverage is subsidized by the government — you pay a premium, but the government covers most of the actuarial cost of the program.
The premium for spouse SBP coverage is 6.5% of the covered retirement pay. This premium is deducted from your retirement pay pre-tax, reducing your taxable income slightly. You can elect less than full coverage (55%) to reduce premiums, but most financial advisors recommend full coverage if you elect SBP at all, since the premium structure makes partial coverage less efficient.
| Factor | SBP | Private Term Life |
|---|---|---|
| Cost | 6.5% of covered retirement pay (~$150-$300/month) | $30-$150/month (age and health dependent) |
| Medical exam required | No — automatic at retirement if elected | Yes for initial coverage |
| COLA adjustments | Yes — adjusts with military retirement COLA | No — fixed death benefit |
| Duration | Lifetime of surviving beneficiary | Term period (10-30 years typically) |
| Taxability to survivor | Survivor pays income tax on annuity | Death benefit is tax-free |
| Government subsidy | Yes — significant actuarial subsidy | No |
| Divorce impact | Complex — court order may require SBP for former spouse | Beneficiary can be changed |
Prior to 2023, SBP payments were offset dollar-for-dollar by DIC (Dependency and Indemnity Compensation) from the VA when a veteran's death was service-connected. This offset was fully eliminated as of January 1, 2023 under the SBP-DIC Offset Elimination. Surviving spouses now receive both SBP and DIC simultaneously. This change significantly increases the value of SBP for veterans with service-connected conditions.
SBP, retirement pay, VA disability, and CHAMPVA all interact. The complete benefits checklist helps you track all of them.
View Benefits Checklist