NEWPORT NEWS, Va. (WAVY) – To watch Certified Financial Planner John Mason talk about the Military Survivors Benefit, you might think you’re in a casino. He said he doesn’t want to see military families leave money on the table.
He uses stacks of poker chips to make his point.
“How many of these chips do you want to keep,” Mason asks, explaining to military retirees or those nearing retirement, Survivor’s benefit plan.
Military pensions can vary over a wide range. Mason uses $100,000 as a round number, with a hypothetical VA benefit worth $20,000. If you refuse the survivor’s benefit, he explains what happens to your spouse after you die.
“The $100,000 goes away, the $20,000 goes away, and the rules with Social Security mean you can keep (only) the higher of the two.”
The annual cost is 6.5% of the pension before tax, but with the survivor’s benefit a full 55% of the deceased’s post-retirement pension is preserved.
But this year, for a limited period, pensioners get a mulligan – a second chance – if they have already declined the benefit. President Biden called for what is known as open season, the equivalent of open enrollment in the HR world. It expires at the end of this year, and the last opportunity like this was 18 years ago.
“If you turned down (the survivor’s benefit) at retirement, you can sign up for it now,” Mason said, calling it a rare opportunity for military retirees. “If you took it at retirement, you could drop it now. You probably won’t see this open season again in your lifetime.”
Mason said that while the clock is ticking on open season, which ends in December, Congress has yet to come up with the rules for people to sign up if they had previously decided to opt out of survivor benefits.
In the meantime, Mason said he wants to get survivor benefits on the radar of the thousands of military retirees in Hampton Roads, and he recommends they seek professional financial advice.