Retiring from the military is an exciting time in your life. But this transition can be intimidating as you move to a civilian lifestyle when the military is all you have ever known. It’s understandable, and expected, that you may have some questions about the process and potential outcomes of the choices you make while you’re planning your retirement.
There will be several important decisions you’ll need to make as you transition from Active Duty to civilian life — and Armed Force Mutual can assist you with each of them. You can start here with our series of articles highlighting the following seven topics to help guide you through the retirement process.
Things to Think About When You're Retiring
The 7 decisions you need to make before you retire include considering:
- Survivor Benefit Plan from Defense Finance and Accounting Services
- VA (Veterans Affairs) Disability Determination
- Life Insurance to replace SGLI (Servicemembers Group Life Insurance)
- Social Security Retirement Benefit
- TRICARE
- FEDVIP (Federal Employees Dental and Vision Program) to replace military dental and vision coverage
- Medicare and TRICARE for Life
- BONUS: Financial Independence, Part 1
- BONUS: Financial Independence, Part 2
You’ll also want to download our Military Transition Timeline to assist you in planning for your transition to civilian life. As always, we’re here to assist you throughout your military journey. If you have any questions or need our assistance with your military benefits, an Armed Force Mutual Member Benefits Representative can help.
The Military Survivor Benefit Plan (SBP)
Before you retire from the military, you have an important decision to make about participating in the military Survivor Benefit Plan (SBP), which allows retirees to ensure, after death, a continuous lifetime annuity for their eligible dependents. The annuity, based on a percentage of military retired pay, is paid to the beneficiary. The premium is 6.5% of your base retired pay to participate in SBP, which upon your death, will provide up to a maximum of 55% of your base retired pay to your surviving dependent.
There are some advantages and disadvantages in electing SBP at retirement you’ll want to consider before you make your determination to participate.
On the plus side, SBP is:
- COLA-adjusted
- Government-subsidized
- Paid with pre-tax dollars
- Does not require evidence of insurability
- Paid up after 30 years; and
- Spouse age and health is not a factor
On the downside, with SBP:
- There is no return if your spouse predeceases you
- There is no cash value
- The annuity payment is taxable
- There is no residual to your estate
- Spouse payment ends if they remarry before age 55
- Once elected or you denied this benefit, it is a permanent choice
So, what happens if you decide not to participate in the SBP? You can simply choose an alternate plan — and there are alternatives to SBP, including buying life insurance. For instance, Armed Forces Mutual (American Armed Forces Mutual Aid Association) offers several different life insurance options that offer benefits comparable to SBP.
How do you know whether to choose SBP or life insurance?
The answer to that question is different for everyone because several lifestyle factors need to be considered, including: your age and the age of your spouse, your current health and if you are insurable, if you have children and what ages they are, what your family assets are and if there are any future expenses (e.g., college), if your spouse currently works or would work if necessary, and other variables.
If you are trying to decide between SBP and life insurance, there are tools available, such as the Department of Defense Office of the Actuary Survivor Benefit Plans that can help you determine monthly premiums and whether SBP or life insurance is the right answer for you.
There are other topics to consider when you are preparing for your military retirement, so be sure to review them all:
- VA (Veterans Affairs) Disability Determination
- Life Insurance to replace SGLI (Servicemembers Group Life Insurance)
- Social Security Retirement Benefit
- TRICARE
- FEDVIP (Federal Employees Dental and Vision Program) to replace military dental and vision coverage
- Medicare and TRICARE for Life
If you have questions, please contact a Member Benefits Representative at 800-522-5221 select Option 2, then Option 2 again or memberbenefits@aafmaa.com.
Veterans Affairs (VA) Benefits
As a Veteran, the benefits you’ve earned in service to your country are well-deserved; however, in order to claim benefits from the U.S. Department of Veterans Affairs (VA), you may have to obtain a VA disability rating.
Why Is a VA Disability Rating So Important?
A VA Disability Rating: gives you priority in the VA healthcare system; proves you have a service connection if conditions worsen; provides tax-free VA disability compensation; and supports service-connected death claims, including VA burial allowance.
How to Obtain the VA Disability Rating
As a servicemember, when you transition from Active Duty, you may apply for VA disability compensation benefits between 190 to 90 days prior to your separation by submitting a Benefits Delivery at Discharge (BDD). The BDD permits the VA to review your medical records, schedule needed exams and evaluate the claim before separation. Find out more on the VA website.
VA Survivor Benefits
Dependency and Indemnity Compensation (DIC) is a VA survivor benefit to which your spouse or eligible child could be entitled. For DIC to be considered, you must have a disability rating from the VA for a condition related to the cause of death listed on your death certificate. Surviving dependent(s) are awarded DIC as a tax-free benefit starting at $1,612.75 per month (2024 DIC standard rate), COLA-adjusted. In addition, your dependents are entitled to an increased VA Burial reimbursement of up to $2,000. Surviving dependent(s) must file a claim to the VA to receive the benefits, and have their claims decided by the VA.
Often, Veterans are hesitant to file a disability claim, but you should be aware that your VA benefits are not transferable to someone else. If you do not use the benefits you have earned, you are limiting access to potential financial and medical support for you and your family.
Armed Forces Mutual Survivor Assistance Services
As part of your AAFMAA Membership, your survivors will have access to our Survivor Assistance Services (SAS) team. Upon your passing, our SAS team will help them obtain all the benefits they are entitled to because of your service. Download our Military Survivor Pre-Planning Checklist to ensure your family has all the information they will need to claim your benefits and handle your loss when you pass. If you are already a Member, you’ll find the Checklist the AAFMAA Member Center.
Preparing for Military Retirement
For more information on additional topics to consider in preparing for military retirement, please see the following:
- Survivor Benefit Plan from Defense Finance and Accounting Services
- Life Insurance to replace SGLI (Servicemembers Group Life Insurance)
- Social Security Retirement Benefit
- TRICARE
- FEDVIP (Federal Employees Dental and Vision Program) to replace military dental and vision coverage
- Medicare and TRICARE for Life
If you have questions, please contact an AAFMAA Member Benefits Representative at 800-522-5221 select Option 2, then Option 2 again or memberbenefits@aafmaa.com.
One of the decisions you will make before you retire is how to replace the life insurance coverage you will lose when you leave the service. You have several options — including Veterans Group Life Insurance (VGLI) from the government, as well as term and whole life policies from insurance carriers.
Why Do You Need Life Insurance?
Life insurance covers essential expenses and provides financial security for your survivors. There are two types of life insurance — term and whole life — and most people need some of both. Determining how much of each is appropriate for you depends on your current life situation — who you need to protect from what financial burdens and for how long.
If you’re leaving the military but you’re still in your earning years with your family depending on your income, and you’re planning a second career, you will need to replace your SGLI. You would want to do this with term life insurance that would cover your lost income, living expenses, any mortgage debt, childcare needs, and education expenses for the remainder of what would have been your earning years.
Additionally, assuming life goes according to plan and you outlive your term policy, you’ll want the permanent coverage of whole life insurance to protect your loved ones from your final expenses when you do pass away at a ripe old age. However, if you wait until you’re the age where your term coverage expires to buy a whole life policy, it will be significantly more expensive. Life insurance is priced by age, and it gets more expensive as you get older, so it’s always better to get covered as early as possible.
Veterans Group Life Insurance (VGLI)
When you retire from the military, you will lose the Servicemembers’ Group Life Insurance (SGLI) coverage you’ve had for 20+ years. You can buy Veterans Group Life Insurance (VGLI) without exception if you apply within 240 days of separation. You have up to one year and 120 days of leaving the military to apply, however after 240 days VGLI requires you to submit evidence that you are in good health. VGLI is guaranteed coverage for all Veterans regardless of their health condition upon leaving the military; however, the premiums increase exponentially every five years and quickly become prohibitively expensive. In many cases, Veterans can qualify for more affordable coverage options from organizations, such as AAFMAA.
AAFMAA Life Insurance Options
AAFMAA offers always-affordable life insurance policies for a variety of needs and coverage levels to all members of the military community throughout all stages of their career and life. The coverage you, your spouse, and your children need is available easy and fast from the nonprofit association that has served military families just like yours since 1879.
Before you retire, AAFMAA policies can supplement your SGLI while you are still in service and, unlike SGLI, our policies will remain in force after you transition out of service. All policies include our hallmark Survivor Assistance Services to ensure your survivors receive personal assistance in accessing any survivor benefits and entitlements you’ve earned through your service.
Learn More
For more information on additional topics to consider in preparing for military retirement, please see the following:
- Survivor Benefit Plan from Defense Finance and Accounting Services
- VA (Veterans Affairs) Disability Determination
- Social Security Retirement Benefit
- TRICARE
- FEDVIP (Federal Employees Dental and Vision Program) to replace military dental and vision coverage
- Medicare and TRICARE for Life
To find out more about your life insurance options with an expert AAFMAA Membership Coordinator, or to get a quote, contact us at 877-398-2263 or visit www.aafmaa.com/getaquote.
Understanding and Planning for Social Security
So you’ve reached retirement, or at least you’re thinking ahead to what it may be like. While you might not be receiving your Social Security benefits yet, it is a good idea to understand them now as part of your financial planning. Here are some details to get you started.
Reaching Full Retirement Age
There are several approaches you can take in deciding when to start receiving your Social Security retirement benefit. To receive the full retirement benefit, known as your Primary Insured Amount (PIA), you can begin to draw from your Social Security benefit at your full retirement age (FRA), which is based on your birth year and is age 67 for most people. You may alternatively decide to draw your benefit early or wait until after you reach your FRA.
- Early withdrawal: If you draw your benefit before your FRA, you will have a permanently reduced amount based on the month and year you start your benefit, which will also affect the benefit for your surviving dependents.
- FRA withdrawal: If you begin to draw your benefit when you reach your FRA, you will receive your Primary Insured Amount benefit.
- Withdrawal after your FRA: If you wait to draw your benefit after your FRA, up to the age of 70, you will receive Delayed Retirement Credits (DRC) that will applied to your PIA. This will be a permanent increased amount of Social Security retirement benefit.
Tracking Your Social Security Benefits
Did you know you can track your Social Security benefits online, whether you are currently receiving benefits or not? Visit https://www.ssa.gov/myaccount/ to create a my Social Security account.
With an online account, you can request a replacement Social Security card; track and verify earnings and get estimates about future benefits; check the status of your application, if you are an SSI/SSDI applicant; change your contact or direct deposit information; and obtain a letter with proof of your benefits. There is even a resource to calculate benefits for a current or former spouse.
More to Consider
Retiring from the military can be complex, so you’ll also want to consider these topics:
- Survivor Benefit Plan from Defense Finance and Accounting Services
- VA (Veterans Affairs) Disability Determination
- Life Insurance to replace SGLI (Servicemembers Group Life Insurance)
- TRICARE
- FEDVIP (Federal Employees Dental and Vision Program) to replace military dental and vision coverage
- Medicare and TRICARE for Life
If you have questions, please contact an AAFMAA (American Armed Forces Mutual Aid Association) Member Benefits Representative at 800-522-5221 select option 2, then option 2 again or memberbenefits@aafmaa.com.
Choosing TRICARE
When you retire, one of the decisions you will need to make is which health insurance provider you’ll use. You may have the option to get coverage through your post-military employer’s healthcare plan or you could choose to continue with TRICARE, which offers two options: TRICARE Prime and TRICARE Select. Learning more about TRICARE can help you make a more informed decision on which option will ultimately be best for you. You should be aware that TRICARE rates, enrollment fees, deductibles, co-pays and more are evaluated and can change annually. Information about your TRICARE benefits are available at https://www.tricare.mil/.
TRICARE Prime
TRICARE Prime is a managed care option that works through a primary care manager (PCM) with no claims, but your PCM will need to provide referrals to any specialist care. There is an annual enrollment fee for either individual or family. There is no annual deductible for an individual or family. Outpatient visit costs can vary according to the type of care. The catastrophic cap for a family per year varies according to Group A or Group B eligibility. For more information, visit .
TRICARE Select
TRICARE Select is a preferred provider network for authorized providers with a claim form. Referrals are not required. However, authorization for certain procedures is required. The annual enrollment fee for TRICARE Select depends on individual or family and Group A or B eligibility. The annual deductible varies according to individual or family, Group A or B eligibility, and for Group B whether Network or Out-of-Network. Outpatient visits vary depending on the type of care as well as in or out of Network. The annual catastrophic cap also depends on Group A or B eligibility. For more information, visit https://www.tricare.mil/Plans/HealthPlans/TS.
Note: Group A is for individuals or sponsors who enlisted, or whose appointment occurred before January 1, 2018.
TRICARE Coverage for Young Adults
If you have a child or young adult enrolled in TRICARE, it is important to note that they are eligible for coverage under the TRICARE plans mentioned above until they turn 23 and/or complete college (if they are enrolled full time at an approved college/university). While the young adult is in school, the sponsor must provide 50% of the child’s financial support. The health plans are dependent upon the sponsor’s military status and where the child attends college/university. Once your dependent either turns 23 or has graduated but is not yet 26, they can qualify to purchase TRICARE Young Adult or the Continued Health Care Benefit Program. For more information, visit .
More to Consider
As you prepare for your military retirement, you’ll need to keep these in mind:
- Survivor Benefit Plan from Defense Finance and Accounting Services
- VA (Veterans Affairs) Disability Determination
- Life Insurance to replace SGLI (Servicemembers Group Life Insurance)
- Social Security Retirement Benefit
- FEDVIP (Federal Employees Dental and Vision Program) to replace military dental and vision coverage
- Medicare and TRICARE for Life
If you have questions, please contact an AAFMAA Member Benefits Representative at 800-522-5221 select option 2, then option 2 again or memberbenefits@aafmaa.com.
FEDVIP (Federal Employees Dental and Vision Program)
You’re on your way to the next phase of life, but that doesn’t mean everything has to change. You still need to be sure you’re covered for life’s necessities, such as dental and vision care. When leaving the military, in general, you have three options available to maintain your dental and vision care coverage. You can:
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Purchase coverage through your post-military employer;
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Buy individual coverage directly from a provider; or
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Find coverage through the Federal Employees Dental and Vision Plan (FEDVIP).
Federal Employees Dental and Vision Plan
FEDVIP provides dental and vision benefits to federal employees, certain retired unformed servicemembers, their dependents, and certain Active Duty family members.
FEDVIP offers 12 dental and five vision plans. Open enrollment with FEDVIP happens each year from the second Monday of November through the second Monday of December. You can also enroll when you have a Qualifying Life Event. Each year, you will need to revisit the options available to you to ensure your coverage levels, premiums, and costs meet your current needs. To check your eligibility, compare plans, see what is available in your area, and enroll, visit: https://www.benefeds.com/general/uniformed-services
More to Consider
Preparing for military retirement involves several decisions. Here are a few more to keep in mind:
- Survivor Benefit Plan from Defense Finance and Accounting Services
- VA (Veterans Affairs) Disability Determination
- Life Insurance to replace SGLI (Servicemembers Group Life Insurance)
- Social Security Retirement Benefit
- TRICARE
- Medicare and TRICARE for Life
If you have questions, please contact an AAFMAA (American Armed Forces Mutual Aid Association) Member Benefits Representative at 800-522-5221 select option 2, then option 2 again or memberbenefits@aafmaa.com.
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