Neglecting the SBP Decision in Financial Planning: A Common Oversight

Retiring from the military can be a confusing time for many, especially when it comes to figuring out what to do about the Survivor Benefit Plan (SBP). This is because the vast majority of financial and investment planning advice is not designed for the unique needs of military retirees. The financial strategies that are in place are based on long-term financial planning, but military retirees are often looking for a way to maximize their benefits in the near term.

The Certified Financial Problem

Financial professionals work in a highly regulated industry with a lot of rules and regulations, which can limit the flexibility they have to help military retirees. Financial professionals also have a responsibility to act as a fiduciary, which means they must put their clients’ interests first. However, these regulations can sometimes lead to group think and a lack of understanding about the unique financial needs of military retirees.10 Advantages Of The Military Pension Protection System | DFAS SBP ReplacementIs SBP Worth It? Military Survivor Benefits Plan Costs

The certified financial problem is the issue of being unaware of other financial options that may be more suitable for military retirees. The standard approach to financial planning is based on the needs of the majority, but this often leads to mediocrity for military retirees.

The Three Pillars of Financial Planning

Most financial planning advice is based on three pillars: savings, investments, and insurance. These pillars are designed to help individuals plan for the long-term, with a focus on living on 80% of their income and putting the other 20% into savings and investments. The goal of savings is to have a safety net in case of emergencies, while investments are meant to help achieve specific financial goals. Insurance is used to manage risk.

However, the last three years have shown that these pillars are not enough to meet the unique needs of military retirees. For example, the right amount of money in savings is a question mark, as the military transition process and the changing economy can significantly affect this number. Military retirees also have a guaranteed income stream from their military pension and VA disability, which may impact how much they need to have in emergency savings.

Goals are also a vague term in financial planning and are often used as a way to get individuals to focus on the obvious, such as buying a house or retiring with a large nest egg. However, military retirees may have different goals and priorities, which may not fit into the standard approach to financial planning.

In conclusion, the struggle to figure out what to do about the Survivor Benefit Plan is a common issue for military retirees. The standard approach to financial planning is not designed for the unique needs of military retirees, which can lead to confusion and a lack of understanding about other financial options that may be more suitable. To maximize their benefits, military retirees need to work with a financial professional who understands their unique financial needs and can help them achieve their goals. To discuss your unique situation, Schedule a Call with us today.

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