If you use social media, you've probably seen more than one charitable account set up for a family of a service member who has died, whether in combat, a domestic incident, or even just an accident. These requests for charitable donations have always confused me, because my experience and understanding of the military benefits system leads me to believe that most families will not have significant financial challenges if their military spouse dies while on active duty. It's a touchy subject, though, and while I have written about it here before, I've never wanted to ask too many questions because it seems rude.
Last weekend, however, I finally braved the censure of the world of Facebook to ask what sort of needs the family did not anticipate to have covered by their military and Social Security benefits. The replies contained some interesting perspectives, and I wanted to share them with you. I am not adding any of my own opinions or facts to these comments, just providing them for your consideration.
Here are some issues that you may want to consider when organizing your financial life and evaluating your need for life insurance, other savings, or other investment products. While most people would rather not think about these subjects, it is important that you are prepared and understand what happens if your military spouse dies.
Amount of Survivor Benefit Plan benefits
Survivor Benefit Plan (SBP) benefits are based upon the income of the service member. For younger and more junior folks, that income isn't very much, so amount provided by SBP is also small. For service members who have served less than 20 years, SBP pays 55% of 75% of base pay. For service members who are retirement eligible, SBP pays 55% of base pay.
For the survivor of an E-1 with less than two years service, it would be just $638 per month to a widow or widower. For the survivor of an E-5 with over 8 years of service, it would be $1218 per month (in 2015 rates). For the survivor of an E-6 with 15 years of service, SBP benefits would be $1496 per month. For the survivor of an E-8 with 26 years of service, SBP benefits would be $3075.
SBP-DIC Offset
Surviving families of fallen military members are also eligible for Dependency and Indemnification Compensation (DIC) payments from the Department of Veterans Affairs (VA). However, a few people don't understand how the DIC-SBP offset works. In short, SBP benefits are reduced dollar-for-dollar by DIC benefits. In some cases, the DIC benefit exceeds the SBP payment and therefore no SBP payment is received. The 2015 DIC rates are $1,254 for the widow or widower, and $310 for each dependent child under the age of 18.
Jobs, Job Skills, and Child Care Costs
Many comments pointed out that surviving spouses often feel the need to return to work, that they often have rusty job skills, and that child care will eat up a huge amount of their income.
Lack of Credit
According to the replies I received, many military spouses don't have credit in their own name, which can be a barrier to moving forward financially. This concern can be eliminated by maintaining separate credit accounts in your marriage, and being conscious of including both spouses in large credit events like mortgages.
Counseling
Several comments mentioned the amount of therapy or counseling that many families require when they have lost a loved one, and that the benefits provided by Tricare and Military One Source do not adequately cover the costs of these sessions.
Life Insurance
If a surviving spouse is also a parent, the need for adequate life insurance increases dramatically. Many surviving spouses are surprised by the cost of life insurance, especially if they are older when first obtaining coverage.
I truly fear that people think I am being harsh or rude when I ask questions, but I always want to learn more, and the information I learn helps me, my readers, and the people with whom I work individually. If you would like to add any comments or questions, please do. More conversation always helps us all.
