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Insurance Guide 2017: What the new blended system means for your Survivor Benefit Plan coverage

March 20, 2017 (Photo Credit: Stephen Morton/Getty Images)
The majority of retiring service members elects a benefit that provides a payment of 55 percent of their retirement pay to qualified survivors. And as the Blended Retirement System reduces retirement pay in favor of Thrift Savings Plan matching funds, it also reduces this benefit in the event of a service member’s death.

Retiring service members can choose Survivor Benefit Plan coverage on any base amount of their retired pay between $300 and their full retirement pay. In 2013, 80 percent of service members who retired enrolled in SBP, compared with 52 percent in 1993, according to information provided by the Defense Department Actuary to the Military Compensation and Retirement Modernization Commission. In return, the service member’s retired pay is reduced by 6.5 percent of the base amount selected.  

The current system calculates retired pay by multiplying 2.5 percent of the final base pay by the number of years served, for those who serve at least 20 years. So after 20 years, retired pay would be 50 percent of base pay. Under the BRS, after 20 years, retired pay would be 40 percent of base pay, with a lesser multiplier of 2 percent — a reduction of 20 percent. 

Here’s how the math might break out: A retired E-8 with 20 years in uniform will make a bit less than $30,000 for his first year out of service if he retires in 2017 under the existing system, according to a Defense Department calculator. If he has the full amount covered by SBP and dies unexpectedly, his spouse would get about $16,500 for the year.

All things equal, a retired E-8 with 20 years under the new system would make about $24,000 in retirement pay – a reduction of 20 percent. His spouse would get 55 percent of that, or about $13,200 for the year, in the event of his death.

The calculations don’t factor in cost-of-living adjustments, which could more than double a service member’s retirement pay over the course of a lifetime. The 20 percent difference will remain steady, but the dollar-figure difference between plans will rise along with the amounts.

Karen Jowers covers military families, quality of life and consumer issues for Military Times. She can be reached at

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