SBP Cost/Benefit Calculator
Enter your retired pay and SBP election to see your monthly premium, survivor annuity, break-even date, and how SBP stacks up against buying equivalent term life insurance.
The question every military retiree faces
| Item | SBP | Term Life (equiv. benefit) |
|---|---|---|
| Monthly cost | $195.00 | $47.50–$110.01 (est.) |
| Annual cost | $2,340 | $570–$1,320 |
| Total cost over 20 years | $46,800 | $11,400–$26,402 |
| If retiree dies in year 5 | $1,650.00/mo for life | $250,017 lump sum |
| If retiree dies in year 25 | $1,650.00/mo for life (COLA-adj.) | $0 (20-yr term expired) |
| COLA adjustment | Yes — grows annually | No — lump sum fixed |
| Survivor outlives benefit | Never (lifetime annuity) | Possible (if lump sum depleted) |
| Tax treatment — benefit | Taxable income (Form 1099-R) | Generally tax-free lump sum |
| Tax treatment — premium | Pre-tax (reduces retiree taxable income) | Post-tax (no deduction) |
| Can go to heirs | No — spouse only (or dependent children) | Yes — any named beneficiary |
- Your spouse is significantly older and likely to predecease you — the 6.5% premium is pure cost
- You need a lump sum (mortgage payoff, college costs) that SBP cannot provide
- Your spouse has their own substantial military or federal pension and FEHB coverage
- You have no dependents and the survivor can self-insure from other assets
- Many planners recommend both: SBP for the income floor, term life for early high-expense years
- Break-even is illustrative. Actual outcomes depend on the retiree's and survivor's longevity, which cannot be predicted.
- Term-life premiums are 2026 market averages. Individual premiums vary by health, insurer, and underwriting.
- The after-tax cost calculation uses your input marginal rate. State tax treatment varies — consult a tax advisor.
- COLA assumption is an estimate. Actual SBP COLA equals the annual military retired pay COLA set by law.
- SBP annuity is taxable income to the surviving spouse (Form 1099-R).
- Paid-up calculation is an estimate. DFAS administers the exact cutoff based on your retirement date.
- This calculator is for educational purposes only and does not constitute financial or legal advice.
Advertisement
How DFAS calculates your SBP premium
DFAS uses the lower of two methods — whichever produces the smaller monthly premium applies automatically. This is verified against DFAS dfas.mil/RetiredMilitary/provide/sbp/cost/ and 10 U.S.C. § 1452.
The $1,096 threshold is adjusted annually with the military retired pay COLA (up from $1,056 in 2025, per the 2.8% 2026 COLA). Source: Soldier for Life Army Echoes newsletter, February 2026; 10 U.S.C. § 1452(a)(4)(A).
2026 SBP premium reference — elected base vs method
FedTools 2026 analysis. All figures use verified DFAS formula constants.
| Elected Base | Method A | Method B | Applied | Note |
|---|---|---|---|---|
| $300/mo | $7.50 | $19.50 | $7.50 | Method A |
| $500/mo | $12.50 | $32.50 | $12.50 | Method A |
| $1,000/mo | $25.00 | $65.00 | $25.00 | Method A |
| $1,096/mo | $27.40 | $71.24 | $27.40 | Method A (crossover begins above here) |
| $1,500/mo | $68.40 | $97.50 | $68.40 | Method A |
| $2,000/mo | $118.40 | $130.00 | $118.40 | Method A |
| $2,348/mo | $152.60 | $152.62 | $152.60 | Near-crossover (≈ equal) |
| $3,000/mo | $217.80 | $195.00 | $195.00 | Method B (cheaper above $2,348.57) |
| $4,000/mo | $317.80 | $260.00 | $260.00 | Method B |
| $5,000/mo | $417.80 | $325.00 | $325.00 | Method B |
The paid-up provision: when premiums stop
Under 10 U.S.C. § 1452(f), SBP premiums stop automatically when both conditions are satisfied simultaneously:
- You have made 360 monthly SBP premium payments (30 years of payments)
- You have reached age 70
The later condition controls. Retire at age 42, and you reach 360 payments at age 72 — you pay until 72, not until 70. Retire at age 55, reach 360 payments at age 85 but turn 70 at month 180 — you keep paying until month 360 (age 85). DFAS administers the exact cutoff; this calculator provides an estimate based on your inputs.
After paid-up, the survivor's annuity continues at full value with no further deductions from your retired pay. Every year of retirement after paid-up, your coverage costs you nothing.
The pre-tax advantage most retirees miss
Under 10 U.S.C. § 1455(b), SBP premiums are deducted from retired pay before federal income tax is computed. This means every dollar of SBP premium reduces your taxable income — a benefit commercial life insurance does not offer.
State tax treatment varies. Some states exempt military retirement income entirely; others tax it fully. The after-tax figure in the calculator uses federal rates only — consult a tax advisor for state-level impact.