Today we are talking about a once-in-a-lifetime opportunity for military retirees. The open season allows retirees who did not take survivor benefits initially to reverse that decision and potentially secure up to 55% of their pension for their spouse if they predecease. In this episode, Michael, John, Tommy, and Ben, will be explaining the cost of purchasing military survivor benefits, the changes in cost over the years, and who is most likely to benefit from this opportunity.
This game-changing decision is a must-know for all military retirees and their families, and Michael, John, Tommy, and Ben are committed to spreading this news far and wide. Additionally, their YouTube video titled "Military SBP Open Season Interview with WAVY 10" provides an even more in-depth analysis of this topic. Listen in to explore the intricacies of military survivor benefits and the open season, and to learn how you or someone you know can benefit from this incredible opportunity.
*Update: Since this recording, WAVY TV 10 responded with a news segment. Click here to check it out. Also, DFAS has released a process, which you can find here.*
Listen to the full episode here:
What you will learn:
- The cost to buy military survivor benefits. (1:56)
- How the cost has changed over the years. (4:30)
- Why this is a chance of a lifetime. (6:20)
- The importance of considering these survivor benefits now. (10:05)
- Who is this most applicable to. (13:00)
- The importance of spreading this incredible news. (18:00)
- How this can significantly impact your loved ones. (24:50)
- Why you should consider this even if you’re young and healthy now. (32:00)
Ideas worth sharing:
“We want our audience to be somebody’s hero.” - Mason & Associates, LLC
“Don’t be submissive of this once in a lifetime opportunity.” - Mason & Associates, LLC
“Don’t rely on the media anymore.” - Mason & Associates, LLC
Resources from this episode:
- Military SBP Open Season Interview with WAVY 10
- Ben Raikes: Website
- John Mason: LinkedIn
- Tommy Blackburn: LinkedIn
- Mason & Associates: LinkedIn
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Read the Transcript Below:
Congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast, hosted by Mason & Associates, financial advisors with over three decades of experience serving you.
Michael Mason: Welcome to the Federal Employee Financial Planning Podcast, hosted by Michael Mason, Certified Financial Planner, John Mason, Certified Financial Planner. Across the table is Tommy Blackburn, also, Certified Financial Planner and CPA, and of course Ben Raikes, Certified Financial Planner and IRS enrolled agent.
Hey, this episode, it's important to know the dates on this one because it may not be released for a few weeks. It's March 7th and this is Military Survivor Benefits Open Season for all of 2023. And really that doesn't mean a whole lot because there's only 10 months of 2023 left and we still don't have the rules.
And that's why it's important to know the date, because when this airs, maybe some additional rules will come out. And when it does, we'll update this.
But for the next 10 months of 2023, it's an open season to either drop survivor benefits — don't know why you would do that, but to drop it if you purchased it or to get your foot in the door if you did not.
Let's just start with a recap. Whoever wants to take this, what's the cost to buy military survivor benefits and what's the benefit?
John Mason: So, the cost, assuming, Mike, you elect full survivor benefits under the military pension is 6.5%. So, basically what that means is if you had a $10,000 pension, you're going to subtract off 6.5% of that and that is the cost for SPP, and that's pre-tax.
So, really, if you're looking at this and you're saying, “Wow, that 6.5% is super expensive, it's really 6.5 times like 0.7. So, it's really like 4 or 5% total cost.”
And then the maximum survivor benefit is 55% of the unreduced pension amount. So, again, if we say $10,000 is your military pension, then 5,500 would be the full survivor benefit amount that you could pass on either A, to a child or B, to a spouse.
Michael Mason: And if you did that and you've retired 10 years ago, then you've been paying 6.5% for the last 10 years. Like you said, it's pre-tax. And believe it or not, John, I got this call the other day from another ex-friend or a friend, ex-client, name also, John, retired military.
And he asked me, “Does military survivor benefits drop to 35% from 55% once you hit age 60 or once your spouse hits age 60 or 62?” And I'm like, “No, John, that's so old school.”
So, I think it's important to bring that up. In early 2000, maybe it's 2005, 2006, the military got away from the reduction. They would, Tommy, go from 55% to 35% when your spouse was eligible for survivor's Social Security.
The first open season we've ever seen in the military was when they got rid of that. So, in early 2005 or 6 time frame, is when they had an open season and they said it stays at 55%. So, I don't know why I thought that was relevant, but.
Tommy Blackburn: I'm just curious because this is taking me back through some history and some information. Did the cost change over time since we used to have this reduction? Or has it always been 6.5 and they just-
Michael Mason: Well, now, you're adding confusion. But that's okay because one, when we asked questions like this, you'll know that we weren't born yesterday and we didn't just start helping federal employees in military yesterday.
So, when I was in, and the cost was very similar to CSRS. So, the first 3,000 of your retired pay was charged at 2.5%. So, if you had a $30,000 retirement, the first 3,000 was charged at 2.5% and then everything else was charged at 10.
And then you went through this iteration where you could choose that old pricing or you could choose the new pricing, which is 6.5%. So, some people, just like in the CSRS, they would take the minimum survivor benefit because that was cheap. It was 2.5% and it protected $3,600 of your retirement.
So, no, it hasn't always been the same price, but when that iteration came in mid-2000, it's 6.5% of your pay, 55%'s the benefit.
John Mason: Well, I think, Mike, I mean, you've really dove right into this topic and there's so much I think that we want to say about it. And number one, we've done a podcast episode on this before where not all open seasons are created equal.
Like you have an annual open enrollment or open season for federal employee health benefits. It comes around every year. It's very boring. Most people don't think about it. They push it off and they're like, “Yeah, yeah, yeah, I'll make a change next year.”
Well, the only open season we've seen in survivor benefits was 2005 when the reduction or the phase out for Social Security was eliminated. And now, over almost two decades later, we have a second one.
And this one is directly tied, if I'm not mistaken, to the fact that there is now a VA if you're a 100% disabled and meet other criteria, there could be a survivor benefit option under the VA and a survivor benefit under your military pension. And those two don't necessarily offset anymore.
So, I think that's why this open season exists for the next 12 months is because there was a material change and without another material change, people may never see another one of these again.
Michael Mason: Yeah, I would bet a whole lot of money that this is your last opportunity to correct what was probably a bad decision. We're going to talk about no-brainers, people that should just say yes to survivor benefits. And then we're going to talk about those that may say yes and those maybe that shouldn't at all. But we want to try and look at all situations and bring clarity to the decision.
John Mason: And maybe it's good for us to put this out guys, why we're talking about military survivor benefit open season on the Federal Employee Financial Planning Podcast. Well, I can think of a handful of reasons.
Number one, we have an enormous amount of our clients who are retired military and retired federal. So, this is directly applicable to all those people.
Number two, we've had people actually waive their military retirement in favor of buying those military years of service towards FERS. Why? Because maybe they're a GS-15 and they've retired as an E-8 and that pension's higher. And in addition to that, because they decline survivor benefits on military and they can pick it up on the federal side.
So, there are a lot of federal people out there that, one, have already retired from both. Two, may be thinking about waiving that retirement in favor of a federal retirement. Maybe that doesn't make sense anymore.
And then three, this is a public service announcement. And four, we want our audience to be somebody's hero. Like we're putting this information out there and we want you, the audience, to share this with the community.
I mean, folks, we live in Hampton Roads, Virginia. And so, instead of talking to my partners here, I'm talking directly to you, our audience. We are trying to get on every major news station in this area and nobody's returning our phone calls. Not one.
So, we're two months in to an open season with no rules. You can tell I'm frustrated. We got no rules, people have already died, we don't know what's going to happen to them. And no news station cares about our veterans enough to interview Mason & Associates to talk about how this open season is a life-changing opportunity.
So, not only is it up to our partners here, the guy sitting around the table from me, it's our audience's job to spread this word and share it. And I'll just say, we're going to do an awesome illustration via YouTube with poker chips.
And we're going to show you the impact of survivor benefits and we're going to link that video right here in the description. So, not only will you have this longer form content, you're going to see a poker chip example that blows your mind. You're going to think, “Why is anybody ever declined SPP?” You're going to see that on our YouTube channel.
Michael Mason: Well, we've spent a career helping people say yes to survivor benefits, my career's longer than yours. But one of the best examples, John was using poker chips and people would come in back when we used to have a bunch of appointments in the office and they would sit down and say, “Yeah, we've decided he has his retirement, I have mine. We're going to turn down survivor benefits.”
And then we show them what that looks like in stacks of poker chips and then they realize how crazy they were. So, that's a good choice. We'll show that on the YouTube video.
John Mason: They're going to love it. And when it's poker chips sitting across the table from you and you start sliding those poker chips or moving them away, it's amazing how people get very emotionally attached to those poker chips and they don't like it when they start seeing them go away.
Ben Raikes: A little something that's been running through my mind as we've all been talking about this is, why this might even be more important for those military folks out there, is the average age when a military retiree calls it quits, it's got to be what? Somewhere in the early to mid-40s?
John Mason: Yeah.
Ben Raikes: So when you're making this decision and you're only 41, 42, 43 years old, you're still invincible. You still have a long lifetime to go. You're probably not thinking about providing for your spouse or even your kids. And it's really hard to comprehend the value of spousal benefits when you think you're going to live forever.
So, they often make these elections and they say, “You know what, I'll just take a 100% of my benefit. I don't want to give that 6.5% away.” So, when we're looking at military, we're thinking, “Hey, this is your option to go back when you are invincible and you were 40. You're 60 now, let's go back and correct that mistake.”
John Mason: Oh, Ben, to your point, when they were 40, 45, 50 years old and they didn't have any health issues, everything was good, life was great, they broke out the slide rule. They said, “I'm going to live till a hundred. This is a waste of money.” They did all that math.
Well, now, they're 65, they have diabetes, they've had two heart attacks and now, all of a sudden, your life expectancy is compressed. You're going to live five or 10 more years. Survivor benefits make sense now. It does.
And maybe it didn't, maybe you couldn't see it clearly. Like our theme song, you'll rest easy, you'll be able to see clearly. Well, maybe you can see a little bit more clearly where that finish line is than you did 20 years ago.
And we hope through this episode, that encourage people not to be dismissive of this opportunity. Because there are assumptions, Mike, that people make it costs too much. Or confirmation bias or something like, “I made the right decision. I don't need to analyze that again.” It's like, “Well, maybe you do.”
Tommy Blackburn: It's the second time this has happened, we don't know if it's going to happen again. So, it at minimum bears looking at it and if you turn them down before, you need to reevaluate your situation.
We think more often than not, you’re probably going to come to the conclusion you should take survivor benefits and this is your lifetime opportunity in front of you.
John, you mentioned earlier, we have no rules. Maybe this is the cynic in me, but I find it interesting when I go to DFAS's website, we do have rules out for open season right now, how to wave survivor benefits. They haven't provided any information on how to pick it up yet. So, we're hoping that's forthcoming.
It is ironic to me that if we want to drop it, they've made that easy right now. But we don't have rules yet on how we can purchase it, which is what we think you should really be looking for here.
That's what we're advocating on the second look, we're not advocating to drop, we're advocating to take a look and see does it make sense to put them in place now?
John Mason: And as we think about this, I feel like who's this most applicable for? And I would say it's the 55 to maybe 70-year-old that declined SPP that can change that decision now. Like do we really need a 97 year old going back and reinstating survivor benefits? Probably not.
Tommy Blackburn: Maybe if they have a much younger-
John Mason: Maybe if they have a younger spouse. I mean, I can't be dismissive of that. But like generally speaking, 55 to 65 or 70 is probably the sweet zone for reversing this decision.
Maybe we can help our audience and whoever wants to take this. If I have a $100,000 military pension, now, my survivor benefit is $55,000. And the writings on the wall, I've got a relatively short life expectancy, my spouse is going to outlive me. What's the value of that? What's the value of a $55,000 cost of living adjusted survivor benefit pension?
Michael Mason: Let me explain it this way, because we've done some math. Ben and I built a Excel table. So, if it's a $100,000 pension today, 30 years ago, it was a $50,000 pension. So, we've done some math and we've figured that that a 100,000 pension today, might need 150 to 160,000 of buyback to be in survivor benefits.
And we know who's on my mind, a client with a terminal illness, a spouse with easily a 10 to 15-year-life expectancy after this terminal illness. So, if it cost 155,000, we're talking three years payback.
I mean, we can do the math and say, 55,000 cost living adjusted income stream is like having a million dollars or more in an investment. But in this scenario, it's an easy clear.
And in here's the problem, if somebody sent this client the letter that said for 155,000 you can be in survivor benefits, 90%-
John Mason: They're going to decline.
Michael Mason: 90% of the people are going to say, “Wow, where’s that 155 coming from?”
Tommy Blackburn: “What a large number? Yeah, I'm not doing that. Yeah, where did that number come from?” But it's interesting when you say, “Well, if I'll sell you a million-dollar asset for $170,000, would you take me up on it?” Chances are you're going to say yes.
Or the other way you broke it down. If you're going to get that 170,000 or your spouse is going to get it back in three years, is this a deal you want to take? Most people now … it's how you frame things. If you just throw the number at them, they're not going to understand, they're going to be put off. But if you put it in context, then all of a sudden a different decision is going to be made.
John Mason: Well, my favorite story in this and it goes back to when I was still in high school and you were changing people's lives during the last open season, you and Ken. And a gentleman, husband and wife came in and let's just say his pension was 50,000 and we're talking about survivor benefit open season.
And those rules were that they were going to confiscate this guy's military pension for what, two years. And I believe his exact reply to you, and I'm just quoting it from the 17 times I've heard this story, is that, “Well, Mike, I can't do without my $50,000 for the next two years, I can't possibly reverse my decision on survivor benefits.”
And the wise Mike Mason said …
Michael Mason: Which is wonderful. It's like, “Okay, I think you're right. If you can't do without 55,000 for two years, how's your wife going to do without it forever?”
John Mason: Boom time.
Michael Mason: Real story, real story. And unfortunately, I mean, he lived longer than we expected. Two years, as soon as he bought in, he was diagnosed with Parkinson's and congestive heart failure. There was no life insurance being purchased there. So, I think it was one of the greatest comebacks that you could ever have.
Tommy Blackburn: Yeah. Sad ending to that story. I was thinking as you were telling the story, was the spouse in the room and what was the look on her face when you came back with, if you can't afford it, what she supposed to do?
Because I can only just imagine the look that the husband (it sounded like it was the husband in this case) received.
Michael Mason: Yeah, the light bulb instantly went on for both of them. And it happened.
But, John, you're talking about getting to the media. During that last open season, we did some radio shows. I tried to get The Daily Press. We call it The Daily Depress, now, here in Hampton Roads.
But they finally came out on September 1, when the season ended September 30 with an article. And a next-door neighbor pulled me off my lawnmower to ask me, “What in the world is this and how can I do it?” So, we'll work harder at getting the media's attention.
John Mason: We'll work hard, but really I think it's up to us and our community that we're building here on the podcast and on our YouTube channel to really just further this message and not rely on the media anymore.
I mean, frankly, I think all of us have a chip on our shoulder with investment media and news media for a variety of reasons. So, let's just make this a Mason & Associates community effort.
Share the podcast, share our YouTube videos. If you have any direct power as a listener and you can get us involved onsite or through Zoom or what have you, to change people's lives, we're in. So, this is a community effort.
Guys, as we think about survivor benefits, I think oftentimes we think about the various income streams that we have. And I'll paint this picture.
John and Tommy are married and John's got Social Security, Tommy's got Social Security. Tommy's military, so he has a pension. And oh, by the way, he has sleep apnea and some other things, so he also has a VA disability. And then let's just say that maybe he's federal too.
And if he starts declining these survivor benefits on his military, I think people underestimate how many different income streams go away. And we're going to show this in the YouTube video, but I think it's just important to note that when Tommy dies, I'm going to lose his Social Security.
Tommy Blackburn: Because you have your own Social Security that's equal or greater.
John Mason: Because I have my own that's equal or greater. So, that's gone. I'm going to lose your military pension because we didn't take survivor benefits. I'm probably going to lose your VA because you don't meet that special criteria.
So, I'm losing all my income except my own Social Security check in that example. So, you only have a choice on a few things. Like I can't protect your Social Security, there's nothing I can do about that, but I can protect your military pension.
Tommy Blackburn: Yeah, I mean, and let's think about the household. So, you said I have three income streams there-
John Mason: Social Security.
Tommy Blackburn: … or maybe four with the VA that you threw in. So, let's just say I'm bringing in, I don't know what number you want to sign here, 150,000 a year between all of these income streams.
And it could be one of those things where, yeah, we thought that John can make it on just whatever his income streams are, but you're telling me that the household light like is not going to change when $150,000 of income goes away.
And the point here is we could only protect, we know of two of those. The federal and the military. Social Security's going away unless we meet some criteria, the VA's going away. So, how about we protect the things we can protect?
It's hard for me to imagine John as my spouse in this example, that you're not going to be affected by six figures of income disappearing.
John Mason: And then in addition with that, well, I don't know, military was tax free. So, that's a nice one to hang onto as well.
And as I think about this and maybe overgeneralizing, Mike, but you've been working in this community the longest, is federal employees have very successful retirements and many of them have seven figure investment portfolios or more.
And as they built this over their career, pay kind of like was low at the beginning and then snowballed over time to where it was at or above private sector pay.
I guess what I'm getting at is you may be very income rich as a retired federal employee. You may be very income rich as a retired military person and not necessarily like investment portfolio rich.
So, maybe in that example, Tommy and I have $200,000 of pensions and 500,000 in TSP. That's great, but 500,000 does not equal $150,000 a year of guaranteed income. And that's just what we've seen over decades is they've done well in their investments, but it's not like the two are equal, if that makes sense.
Michael Mason: Oh, your millionaires and your pension plans. That's where you’re millionaires. You may be multi-millionaires in your pensions and then you add in your savings.
So, guys, I want to take this a direction, we've done wonderful. You set this up a few minutes ago. You're retired, you made a decision as Ben said at 45, you're now, 65. At 45, you were 10 foot tall and bulletproof. Now, you're 65. Now, you've convinced yourself you've made the right decision all these years. So, do not just turn a deaf ear to this open season.
Because here's the things you did. You bought inadequate whole life insurance or you bought adequate term insurance. Well, the term insurance’s about to run out. You know it is. I mean, we see it all the time and term insurance is about to run out and you'd hate to be sitting on the sidelines hoping to die before your insurance dies.
So, if this is you, now, the next thing you're thinking, and Tommy, we used a $100,000 military retirement, that's going to be on O-6, it had 30 years in. If you're drawing that a 100,000 now or you're drawing 50, it doesn't matter. The 100,000 guy is going to have $150,000 commitment to buy in. That's a good guess on our part.
Here are the rules we know. We know that you're going to have to pay back premiums. We don't know what the interest factor is going to be on those back premiums, but we know you're going to have to pay back premiums. That's where I'm coming up with 130 to $170,000.
Well, the next thing you're going to ask yourself is, where do I get it from? Well, maybe have enough permanent life insurance and if you have this terminal illness that you can use your life insurance. How would you use the life insurance before you die?
John Mason: So, I guess in that example you're looking at, do I keep the life insurance? If so, maybe I'm doing a loan against the cash value or maybe I'm doing some sort of like partial withdrawal or extracting dividend additions or what have you, but. So, maybe you're doing that-
Michael Mason: Or living benefit.
John Mason: Or living benefit.
Michael Mason: If you've got a terminal illness.
Tommy Blackburn: Like an accelerated death benefit type deal.
Michael Mason: Yeah. If you've got a terminal illness, we've got this half a million-dollar life insurance policy with a terminal illness, you can get up to $250,000. Well, that 150 from that rider is much better used buying $55,000 a year of survivor benefits.
But I've sent a congressman and you should send your congressman as well as soon as possible. But I've sent Congressman Wittman and haven't got a response from him. So, yeah, you consider that the next time you vote.
But I've said there's people with terminal illnesses that are dying every day in the military that would love to have bought into survivor benefits. We're two months into this now.
And the other thing I said is that your premiums are pre-tax in SBP, Survivor Benefit Plan. So, while they're figuring out how people buy in, can you give them an option for an IRA? So, in the scenario we just painted, if I have an IRA that has 150,000 in it or a death benefit that I can use before I die that has 150, which one am I going to use?
John Mason: You're going to use the IRA. And maybe what we'll find out in all of this too, Mike, is that, for CSRS folks, if there was unpaid for time in their pension calculation, and it was before like 1989 or ‘93, whatever the rule was, you had this thing called an actuarial reduction.
Where if you owed $50,000 for back CSRS time, you didn't have to pay it. What they would do is they'd reduce your pension by a 100, 200 or 300 a month.
We don't know, maybe there'll be like an actuarial reduction on survivor benefits. Now, probably not because under an actuarial reduction, you stopped paying for that at death.
So, that actuarial reduction could have been one month or a lifetime. It would probably not be good for the national debt or the financial community as a whole to have an actuarial reduction on SBP. But I think that would be the greatest world, if that was an option.
Tommy Blackburn: Probably the easiest to sign up for. You just reduce my future checks I get. That would be nice. We'll see if that’s an option.
John Mason: Don't take me to zero, just reduce it over my life expectancy. And oh, by the way, if I die tomorrow it's paid up. That'd be pretty super awesome. Not you dying, but the fact that you didn't have to pay for it anymore.
Tommy Blackburn: The financial part of that would be pretty awesome. But the yeah, end result if you die, we’re not looking for that one.
Ben Raikes: I think we have all agreed that if you are someone who's receiving a military pension, absolutely go double check, take a look at this, call someone like us. See if it makes sense to buy back that survivor plan benefit if you haven't already.
But who are the folks that we can think of that are no-brainers? I think we have been saying all these here and there as we're talking, but you mentioned someone who's terminally ill.
If you don't have survivor plan benefits, absolutely, this is something that you need to do. Maybe if you're someone who has a spouse that's much younger than you, this is again, a no-brainer.
Who else is out there where we can't foresee a situation where this isn't to your benefit.
Michael Mason: Yeah, I would just like to reiterate, Ben, and you did a great job setting this up. “She will be okay.” How many times have we heard that? And then I'm not being sexist. Usually, it's the male retiree. “She'll be okay.” Well, she's not going to be okay.
We can help it be not terrible, but she's probably not going to be okay because you may have made two bad decisions. You may have turned Social Security on early and didn't take survivor benefits.
So, here's where I would go. Everybody that doesn't have survivor benefits, that has this opportunity should at least look at it. And then I would ask you also, if you have a financial plan and the financial planner's not talking to you about it, or the financial planner says something as silly as this, “Oh, it's going to cost you $150,000.”
That's a mistake. They don't do any math. And what are they worried about, John? They're worried about losing $150,000 assets under management, aren’t they?
John Mason: Sure. Doesn't sound like a fiduciary or somebody that has your best interest at heart. We don't plan to fail, we fail to plan, is a saying that we have. And I think a lot of people have said it throughout the world, but you don't plan to fail. I don't think anybody also, plans to just have an okay retirement.
Now, let's face it, a lot of the United States has an okay, or not okay retirement. There's a lot of people that wish they had more money and more income security.
But generally speaking, when we dream of retirement, when we dream of these years, we dream of the best possible scenario. And that's us thriving in retirement. We don't dream about surviving.
So, while all of a sudden now, when we talk about death, do we start planning on survival instead of thriving? So, thrive, not survive, should be the conversation. Thrive, not survive. We don't just plan to have mediocre or less than retirements and we shouldn't plan for that for our surviving spouse.
Michael Mason: And when we make those decisions at 45, our world changes when we're 65. When we've had maybe the heart attack or we're trying to control A-fib and life insurance is running out. You begin to think way different than you thought at 45.
So, Ben, to your question, and let's go around the table with this. We've done terminally ill.
My second one would be if you're leaving money to children that may already be financially successful or you're leaving money to a charity and you look at your buy-in. And we can't guarantee that your spouse is going to live long enough to recover the buy-in. But the charity doesn't need it. So, we can take a chance.
So, maybe you don't have the money, maybe you don't have a life insurance policy that has a terminal illness rider and you're not terminally ill, but you look and say, “If I took out a $100,000 mortgage on my house, that's going to cost me …” I don't know. What's a good number guys? A 1,000 a month tops.
But I just bought 4,000 a month of income for my spouse. So, if you look at that and say, “Who cares if she dies after receiving this three years? The charity's going to get the house, the kids can sell the house.”
So, I would say that if you're average and you're about the same age, or definitely to Ben's point once the non-military spouse is younger, then you ought to just find a way to get your foot in the door because it's a million-dollar asset. Every 40,000 of that pension's a million dollar asset. You should find a way insure it.
John Mason: I'm thinking back to we've had several clients who have had cancer and no longer … well, what's the saying? Like once you've had cancer, you always have cancer. But we have clients who have had cancer who appear to have currently beaten it as of today, with the thought that it's going to come back probably in the future. That's kind of the logic between if you've had it, you're going to have it again.
So, if you've had cancer and maybe you're better today. Maybe it was breast cancer, prostate cancer, and you're better in 2023 and you had this five years ago, we should probably think about survivor benefits.
And this is not like a political statement, but maybe you had COVID and your lungs have been impacted and we don't know what the next disease is going to be or the next pandemic's going to be.
So, maybe you had pneumonia and you're like, “Man, that really kicked my butt.” And maybe now, you're more vulnerable to these future things. So, maybe not terminal but vulnerable. What's happened that now, has made you more vulnerable than you were before?
Or maybe, Ben, I'm stealing a lot of thunder here. Maybe over the course of time, you were very, very conservative when you retired at 40 and now, you enjoy flying around in a squirrel suit, base jumping. You might want to consider survivor benefit plans on that military pension because you have some dangerous habits that you didn't used to have.
Michael Mason: Or maybe you drank the water at Camp Lejeune. That's not a funny statement. I mean, that's terrible but it's just another example that even if you don't have one of those diseases, but you drank the water, you were stationed there, you're more vulnerable.
Tommy Blackburn: Well, you're older. In all these scenarios, at the end of the day, we don't usually become healthier as we age. We hope to maintain our health, maybe we get healthier, but it's kind of hard to go through life and think you got more insurable.
You spend a career building this asset. You worked a career knowing that you were going to get that pension you drove. That was part of your decision. You valued it a lot. Why don't we value it now? It's going to mean a lot having these protected income to you, your current lifestyle and your spouse.
I mean, I think about state documents sometimes, even now, at the young age, John, I think you have the same feeling of, “I will rest a lot easier knowing that if something happens to me, things are in order, assets are there. It's nice to not have that burden on my mind.”
It's the same thing, knowing you're going to leave a pension to those you love. So, let's have those thoughts as we think about it.
And again, I don't know too many vets that I've met in my life that they're healthier at this stage of life than probably when they got out to be. And so, being able to pick effectively, that insurance up now, let's take a look.
John Mason: Well, I love what you said and as we close down this episode, I think it is so powerful. You take a 100 or 200 grand out of your financial plan and maybe that lowers your annual withdrawal rate by 6, 8, $10,000 a year.
That seems maybe a little significant, but maybe what that did, because now, you have survivor benefits, is you have security, you have clarity, you can see what the other side looks like. You know your spouse is going to thrive, not survive.
Now, all of a sudden that 800,000 that we still have left over, how much more can we enjoy that over the next 20 or 30 years that we're not threatened every time the market goes down? So, like think of that and the peace of mind that you can have with your spouse knowing that they're going to thrive, not survive.
So, couple parting thoughts. If it wasn't worth considering, the government would not have given you this option. If this was so dumb, the government would not have given you this option to reverse your decision that you made whenever you've retired. So, it is worth considering and don't dismiss it.
Number two, be a hero and change lives. We want you and the Mason & Associates community, the listeners of this podcast to share this, share our YouTube videos as we put this out. This is our responsibility as a community to change the world, serve our veterans, those who serve this country.
We can't count on anybody else to do it because this doesn't sell on national TV. This does not sell on national TV. Everybody wants to help veterans, but nobody wants to take this story. So, this is our community, our responsibility as a whole to share this and change lives throughout the country.
Michael Mason: Yeah. And as we we're closing this down, and I want Ben's last thoughts and Tommy's, and I just wanted to tell our producer that's sitting to my right, that we're going to get this thing out of here. We're going to get it cleaned up. We're going to get it out by March 30th.
Actually, we need to get it out as soon as we can because on AM 790 WNIS and we're going to have an hour of call in from six o'clock to seven o'clock eastern time. So, if we can get this podcast out, plenty of time for people to hear it so that they can tune in to AM 790 WNIS, Thursday, March 30th from 6:00 to 7:00. Just don't dismiss it.
John, you made such a great point that said as a taxpayer, I'm frustrated. I am frustrated. I'll tell you this, I want to help our military as much as possible, but typically, when you make a bad decision turning down survivor benefits, you don't get the other opportunity. And taxpayers are going to lose money in this.
But we don't judge our financial planning advice based on what's good for America. Once we have the rules, the rules are the rules. So, we're going to help you get it.
John Mason: Well, folks, this has been another awesome episode at the Federal Employee Financial Planning Podcast. Thank you to all my hosts and co-hosts and our business partner, Ken Mason, who's not here with us today. To our clients, Tommy, please share your final thoughts.
Tommy Blackburn: Final thing I wanted to share here is go back to, this is how important survivor benefits is to us, Episode 2, Survivor Benefits - Military & Federal. So, if you want to learn more about how survivor benefits work, check out Episode 2.
John Mason: And again, thank you to our audience, thank you to our existing clients who have empowered us and put us in a position where we can deliver this message to you, our audience of the Federal Employee Financial Planning Podcast. We’re Mason & Associates, masonllc.net.
Please note the description for an updated response from WAVY TV 10.
The topics discussed on this podcast represent our best understanding of federal benefits and are for informational and educational purposes only, and should not be construed as investment, financial planning, or other professional advice.
We encourage you to consult with the office of personnel management and one or more professional advisors before taking any action based on the information presented.