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Army Retirement Series: Planning for retirement money

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The best advice is to find a financial expert. Photo credit: File photo

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As we creep closer to my husband's retirement next summer, I'll tell you what weighs most on our mind: money. Dinero, mullah, scratch.

Trust me, you start to worry about it. Maybe you have been all along. But suddenly it hits you that your (or your spouse's) retirement check will barely cover your mortgage (or rent) and utilities. Goodbye, BAH! See ya, separate rats! Adios jump pay and specialty pay.

And to top it off, no longer will you have less money coming in, but you will have more money going out for things you may not be used to paying for - like TRICARE, dental coverage and life insurance. You may not realize how important these benefits are until the costs start staring you in the face. Coupled with a paycheck that has been slashed in half (at least, probably more like a third by the time you count your BAH and other allowances), you start to get worried.

Holy crap! How are we going to pay for all this on just a retirement check? Are we going to have to live in a van down by the river?

My husband's dreams of becoming Mr. Mom have been dashed - he will have to find a second career. No pressure, honey. No pressure. I have a job, yes, but it's not nearly enough to make up the deficit. Ideally a GS-11 will fall in my lap and all will be good. Right. Who knows, maybe he'll get a fat contractor job and we'll be swimming in cash. But he doesn't have anything lined up right now - though Lord knows he's trying - so I'll be honest, we are kinda stressing about it.

So what kind of bills are we talking about here? As I dive deeper into this process, I'm learning quite a bit. We talked to our financial guy at First Command, who is great. Helpful hint: if you are retiring in the next year or so, get a financial guy. Now. First Command in Lakewood is very military friendly and a great place to start.

Here are just a few of the things you'll need to figure out.

Survivor Benefit Plan

One of the most important decisions you will make upon retirement is whether or not to take the Survivor Benefit Plan (SBP). This plan, subsidized by the government, provides 55 percent of the servicemember's retirement check to his or her spouse for the rest of their life (hint: don't remarry before age 55 or it goes away). Cost is 6.5 percent of the base amount you select (you can choose your full retirement amount or just a portion - for instance if your base amount is $1,000 you will pay $65 per month. The annuity paid to the survivor would be 55 percent of the base amount, $550. Multiply accordingly based on your base amount).

Also, after 360 months of SBP pay in, you are considered "paid up" and don't have to pay anymore, even though the benefit continues. An important thing to know about SBP - if you don't opt in at retirement, you can't opt in at a later date. There are no "open seasons." You can opt out, however, but only within a two-year period, and you can never opt back in. So choose wisely. To learn more,

Life insurance

SBP is a good thing, but more than likely, it won't be enough.

While on active-duty, the military provides 400k of SGLI (Soldiers Group Life Insurance) to the servicemember. Once out, though, that goes away. Sure, you can buy into VGLI (Veteran's Group Life Insurance) - but that gets pricey and, unlike some whole life insurance policies, you can't get back any of the money you pay in over the years.  You don't get any of your term life insurance premiums back either, but it's a much cheaper option and, combined with Survivor Benefit Plan, is not a bad way to go. A good thing about VGLI, however, is that there are no physical requirements. So if you are unable to get life insurance for health reasons, then VGLI will always be an option.

So, if you don't already have it, consider some other forms of life insurance like term or whole life (check with your financial guy or gal about what's best for your situation).

A word of advice to you fellow future retirees: Don't wait until the last minute to start all this planning. It's a lot to think about.

Coming up next time: VA disability. Oh boy!

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