Agenda. Introduction Current Survivor Benefits Overview Future Benefits - Planning Ahead

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2 Agenda Introduction Current Survivor Benefits Overview Future Benefits - Planning Ahead Survivor Benefit Plan (SBP) Insurance Social Security VA Benefits Retirement Savings

3 Navy Mutual Aid Association Over 135 years old Non-profit No Endorsements Congressionally recognized veterans organization Approved by Secretary of the Navy Coast Guard Commandant

4 Overview of Current Death Benefits

5 Important Documents Wills/Powers of Attorney Latest Retired Pay Statement DD214/Statement of Service Medical/Disability Records Marriage/Divorce Documents Birth Certificates Insurance policies (1 st page) Current Social Security Statement Planning Checklist, Survivor Checklist, Personal Log

6 E-6 Example with 10 years, Spouse & 2 young children Survivors Monthly Income Spouse DIC $1,254 Spouse Transition $270 SSIA $200 Children s DIC $622 Spouse SBP $27 Social Security $2,871 TOTAL $5,245 $62,940 potential annual income Child Only SBP adds $15,048 annual income

7 O-6 Example 29 years with spouse and one child Survivors Monthly Income Spouse DIC $1,254 Spouse Transition $270 SSIA $200 Children s DIC $311 Spouse SBP $3,083 Social Security $3,519 TOTAL $8,637 $103,644 potential annual income

8 Active Duty Death Benefits Death Gratuity $100,000 Housing Allowances 1 Year Medical/Dental Coverage 3 Years SS Lump Sum Death Benefit $255 SGLI $400,000 Paid for Unused Leave Paid any Arrears in Pay No Cost Final Move Family Transportation to Funeral

9 Civilian Death Benefit SS Lump Sum Death Benefit $255

10 Retirement Planning Income Employer Pension Social Security Savings & Insurance

11 Survivor Benefit Plan (SBP) Lifetime Annuity 6.5% Family COLA Insurable Interest Survivors Spouse concurrence Life Expectancy Spouse Retirement benefit beneficiaries Pre-tax premium Child only Subsidized benefit 55%

12 Survivor Benefit Plan (SBP) Active Duty Death SBP - automatic benefit for survivor(s) Death in Retirement Retired Pay STOPS, UNLESS you elect SBP

13 SBP Cost & Benefit Cost 6.5% of Base Amount Pre-tax premium

14 SBP Cost & Benefit Cost Benefit 6.5% of Base Amount Pre-tax premium 55% of Base Amount COLA adjusted

15 SBP Base Amount $300 up to gross retired pay Survivor(s) get 55% of base amount Example: Base amount = $1,000 Benefit = $550 Elect SBP Select Base Amount $

16 SBP Who can you cover? Only ONE election per member Form DD2656, or CG 4700

17 Retiring Single? Insurable Interest Family member closer than cousin Business partner someone reliant on your income Cost is 10% - 40% of retired pay. Premiums based on your age, age of beneficiary May elect to cover new spouse or child in retirement Enroll beneficiary within 1 year from date of event

18 Divorced? Check decree Former Spouse / Former Spouse & Child Decree determines member election Cost & benefit: same as for Spouse/Spouse & Child If not in decree, member makes election at retirement

19 Married? Spouse Lifetime payments COLA Remarriage before age 55 payment ends If you choose to decline SBP, or elect base amount less than full retired pay, spouse must concur. SBP Election Signature: Spouse Signature:

20 Married with kids? Spouse & Child Cost: 6.5% + child premium Example: SBP Base Amount = $1,000 Retiree 40, Spouse 38, Youngest Child 10 Cost: $ $0.56 = $65.56 Benefit: 55% Spouse receives payment for life Includes all eligible children If spouse dies, child receives payment until 18 or 22

21 Child Only Children eligible beneficiaries until 18 (or 22) Premium payments end at 18 (or 22) Disabled child eligible for life Cost: based primarily on age of youngest child Example: SBP Base Amount = $1,000 Retiree 40, Youngest Child 10 Child Only Cost = $3.50

22 SBP Premiums Pay for 30 years AND until age 70 Stop paying premiums when no eligible beneficiary When child turns 18 (or 22) If death or divorce of spouse death of retiree Decision revocable between 2 nd -3 rd year after retirement

23 SBP Benefits Can Exceed Cost $60,000 $50,000 $53,950 $40,000 $30,000 Premiums paid, $30,500 $31,887 $20,000 $10,000 $- $10,471 Benefits received Premiums paid after 1 yr after 3 yrs after 5 yrs Base amt = $1000, Spouse coverage paid for 30 years, 1.5% COLA

24 SBP Considerations Life Expectancy Assets Savings/Investments Insurance Spouse income - ability to support household Inheritance Alternatives weigh cost & benefits

25 SBP vs. Life Insurance SBP Lifetime, monthly, COLA adjusted benefit Pre-tax premiums Fixed beneficiary(ies) Age, health, lifestyle NOT considered Insurance Fixed sum benefit No tax break on premiums May change beneficiaries anytime Eligibility based on health, age, lifestyle

26 Reserve Component SBP (RCSBP) Options Option A: Decline Participation Can join prior to retired pay starting, if desired Option B: Deferred Annuity Starts at date of 60th birthday Option C: Immediate Annuity Automatic if no election after 90 days

27 Life Insurance Types of Insurance SGLI, FSGLI, VGLI

28 Life Insurance Basics It s not for YOU it s for your survivors Two basic types: Term and Permanent Needs vary over lifetime Cost depends on age, health, type of policy Primary reasons to purchase Estate/Funeral expenses Provide income for survivors

29 Life Insurance Term Lower premiums Fixed period of coverage Most policies are for peace of mind Permanent Coverage never ends (AKA whole life ) Higher premiums

30 Term Life Insurance Facts

31 Term Life Insurance Facts <1% of term policies pay out

32 Term Life Insurance Facts <1% of term policies pay out How much do you need? Is $400,000 enough or too much Invested at 6%, paying out $3,841 per month $400,000 lasts only 10 years

33 Term Life Insurance Facts <1% of term policies pay out How much do you need? Is $400,000 enough or too much Invested at 6%, paying out $3,841 per month $400,000 lasts only 10 years SGLI goes away when you leave service

34 Servicemembers Group Life Insurance (SGLI) Pure term insurance $400,000 maximum (automatic) = $28/mo Traumatic injury protection Paid out in lump sum or 36 installments Accelerated death benefit option Beneficiary financial counseling service

35 Family SGLI (FSGLI) Children covered at no cost at $10,000 each Spouse coverage up to $100,000 Cost based on age, increases every 5 years Convertible to permanent commercial policy No proof of insurability required

36 Veterans Group Life Insurance (VGLI) Maximum coverage $400,000 as with SGLI Available in increments of $10,000 Accelerated death benefit option Beneficiary financial counseling service Convertible to permanent commercial policy Renewable at 5-year intervals No proof of medical insurability Up to 240 days to elect

37 Age VGLI monthly premiums Based on $400,000 maximum coverage < $0 $500 $1,000 $1,500 $2,000 $32 $40 $52 $68 $88 $144 $268 $432 $600 Monthly premium $920 Monthly Premium $1,840

38 VGLI vs. Term Life Insurance $700 $600 $500 $400 $300 $200 $100 $0 $400K Level Term Life insurance: Non-Smoker Level Term VGLI $37K Savings Age

39 Why purchase VGLI?

40 Why purchase VGLI? No proof of medical insurability 240 days to elect

41 Social Security Benefits What you pay in What benefits are available

42 Social Security Basics Social Security Tax 6.20% of first $118,500 Medicare Tax 1.45% of all earned income Total 15.3% = 7.65% % Benefit Primary Insurance Amount (PIA)

43 Social Security Benefits Survivors Disabled Retirees

44 Survivor Benefits Social Security Eligibility depends on age of children, spouse Each survivor 0.75xPIA Family maximum 1.75xPIA As children get older, benefits end.

45 Retirement Benefits Social Security Age 62 earliest age to collect retirement benefits Full retirement age Birth Year Full Retirement Age months/year later 67

46 VA Survivor Benefits Active Duty or Service-Connected Death

47 VA Survivor Benefits DIC: Dependents Indemnity Compensation $1,254 unmarried spouse $270 for first 2 years $311 per child DEA: Dependents Education Assistance $1,018 for 45 months Post secondary education

48 Survivor Planning Income Plan ahead for survivor(s) income. Employer Pension Social Security Savings & Insurance

49 Survivor Planning Income Plan ahead for survivor(s) income. Employer Pension Savings & Insurance

50 Survivor Planning Income Plan ahead for survivor(s) income. Savings & Insurance

51 Planning ahead Understand your benefits. Make informed decisions. Hope for the best. Plan for the worst.

52 Saving For Retirement Individual Retirement Accounts (IRAs) 401K plans Thrift Savings Plan (TSP)

53 Tax Advantage Savings Individual Retirement Accounts (IRAs) $5,500/yr $1,000 catch up over age 50 Thrift Savings Plan (TSP) or 401K $18,000/yr $6,000 catch up over age 50

54 Thrift Savings Plan Not to Exceed $18,000 in 2015 Up to 100% of Bonuses, Special or Incentive Pays In a Combat Zone, Up to 100% of Military Pay or $53,000, Whichever is Less Pre-tax Contributions Tax Deferred Growth Several Investment Options Expense Fee.029%

55 TSP - Separation from Service

56 TSP - Separation from Service Rollover to eligible plan Such as IRA or 401K

57 TSP - Separation from Service Rollover to eligible plan Such as IRA or 401K Withdraw Pay taxes Pay 10% penalty if applicable

58 TSP - Separation from Service Rollover to eligible plan Such as IRA or 401K Withdraw Pay taxes Pay 10% penalty if applicable Do nothing

59 Summary of benefits SBP: Retirees must decide upon retirement VA Benefits: Death must be service-connected SS Survivor Benefits: Eligibility is age-specific SGLI: Terminates 120 days after leaving service Government benefits: Monthly income, NOT lump sum Most families need more protection

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