Simple formula determines cost of Survivors Benefit Plan

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Dear Sgt. Shaft:

What is the correct formula for determining the cost of one's Survivor Benefit Plan coverage?

George F.

Lehigh Valley, Pa.

Dear George:

My sources tell me you should take 6.5 percent of the annuity base amount and that will constitute your Survivor Benefit Plan premium. The base amount can be as low as $300 or as much as the full value of retired pay. Keep in mind that the costs are imposed before retired pay is taxed, so the relative cost is actually lower than 6.5 percent.

There is another method of calculating SBP costs, which is even cheaper if the retiree elects a small amount of coverage but becomes more expensive the more coverage is elected.

Dear Sgt. Shaft: