Other Considerations for the Military Retiree

Usually when having conversations about retiring from the military, the discussion inevitably shifts toward post military employment and dealing with VA disability claims. In my new book, Military Retirement: An After-Action Review, I share what I learned about all the other considerations for the military retiree. I didn’t realize until I was already retired the complexity of the many other important considerations for the retiree and veteran!

Case in point; “other considerations” is the longest chapter in the book and probably only scratches the surface! The following is an excerpt from my lessons learned on life insurance, a definite “improve” from my own retirement journey. I didn’t consider life insurance as an important part of my military retirement. To be honest, I probably didn’t know what to consider!  

I never gave much thought to life insurance while on active duty.  I just knew I had my $400,000 SGLI policy and that was all I needed. My assumption is many, if not most, veterans were like me. Life insurance is just not something you want to think about when you believe you are ten foot tall and bulletproof! I learned during my retirement journey that some of my fellow service members were very wise to give this important topic consideration long before retirement.

As we close on retirement (and get older) life insurance suddenly becomes a big deal. Seems like there are about 100 different life insurance options for the retiring veteran and everyone is trying to sell veterans a policy. I’ll share my two cents on how I navigated the bombardment of information and played out the life insurance question. Probably not the best way, but a way nonetheless!

Life insurance is often billed as an investment for the family’s future. Unfortunately, it is an investment for the future that doesn’t include you! Life insurance should be considered carefully and in my humble opinion, is definitely a “less is more” type of thing. Better to pass on a healthy estate of retirement accounts and real estate investments than put all that money into monthly insurance premiums!

However, back here in the real world, life happens, and tragedy does strike. If the sole earner in a family passes away during peak earning years, loved ones will not only be left mourning the tragic loss, but also trying to make ends meet for some time until able to pick up the pieces. For this reason, during one’s earning years, it is advisable to have some life insurance coverage. But what kind of policy and how much coverage? These are the million-dollar questions (pun intended).

I wished I had been as smart as some of my buddies who secured 25 year or longer, term life insurance policies when they were in their 30s while on active duty. This is absolutely a smart move in my opinion as the fixed rate premiums are generally very low and the term could cover loved ones up until Social Security or other retirement benefits start kicking in. 

If you were like me and didn’t plan ahead with a term policy in your 30’s, then not to worry, there are plenty of life insurance options available for the new retiree. Veterans Group Life Insurance (or VGLI) is essentially just a continuation of SGLI and available for a period after retirement. VGLI didn’t pass the math for me as the premiums get pretty high as you age. The Survivor’s Benefit Plan (SBP) I believe is a much better option. Important point of clarification, SBP is not technically life insurance but in application serves pretty much the same role.

Additionally, there are other policies offered by the VA such as “VA Life” (if qualified). There are also numerous insurance policies at competitive premiums endorsed by veteran support organizations such as MOAA, VFW and the American Legion to name just a few. I chose to pass on these options.  

While SBP and a respectable estate are my primary means to “invest in my family’s future”, there is another benefit I didn’t know about until I returned to the ranks of the civilian. Many civilian employers offer excellent group term life insurance policies. I had about $800,000 worth of life insurance for around $50 a month from my first employer! Of course, the “term” for this life insurance is the duration of employment.

So, with SBP, life insurance from my employer and our estate, for the time being, I rest easy at night knowing my family will be taken care of if I don’t wake up! That being said, there is a small gap in my retirement planning that I haven’t quite figured out yet. I would love to retire for good early, perhaps between 55-60, but if I do, I’ll lose my employer life insurance. This is exactly where that term life insurance I mentioned earlier that my buddies wisely purchased at age 35 would have come in very handy.

I will most likely have to secure a 10-year term life insurance policy to cover me from, let’s say, age 57 to 67. The premiums will be horrible, even if I stay healthy and can find someone to write me a policy. After 67 we’ll just have the estate, SBP and any social security benefits that may be available. Anyway, I’ve got a few more years before crossing that bridge!

There is a myriad of life insurance options available for veterans other than term life. Like many of the financial considerations for the retiree, it comes down to a math problem and personal comfort level. This is definitely one of those areas where self-study, talking to the family and the advice of a professional (a financial or estate planner, not an insurance salesperson) is a must. For lack of a better expression, life insurance is one of life’s necessary evils, but over insuring can quickly do more harm than good for one’s financial future. I should have spent more time prior to retirement on this important “other” consideration for the military retiree!

The views, opinions and biases expressed in this blog are the authors and do not reflect those of the U.S. Army or Department of Defense.

Check out all the sustains and improves from just about every aspect of my own transition from career Soldier back to civilian in my new book, Military Retirement: An After-Action Review. Free eBook download or paperback purchase on Amazon.

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