How much will I receive when I retire from the military?
If you have served for several years or decades in the military, when you return to civilian life, you will be entitled to retirement benefits. These benefits take different forms and may include a pension, health coverage and disability benefits. The specific amount you receive will depend on the length of your service and your rank in the military.
Here’s what to expect when you retire from the military:
– Retirement salary.
– Survivor’s benefits.
– Medical benefits.
– Additional benefits.
– IRA opportunities.
Military retirement pay
The army offers some retirement plans, so you’ll want to see which one you have and how it works. Typically, you must serve for at least 20 years to receive full retirement pay.
Military pension plans include:
– Final pay. Members who began their years of active service or reserve service before September 8, 1980, are eligible for a retirement pension which is based on their final base salary.
– High-36. This plan is available to those who entered active or reserve service after September 7, 1980. Members receive a retirement allowance based on the average of the highest 36 months of base pay.
– Disability. Military personnel who are determined to be medically incapable of continuing to serve and who have a Department of Defense disability rating of at least 30% may be eligible for this plan. It calculates a monthly salary based on either the final salary or the High-36 plan, depending on the appropriate plan.
– CBS / REDUX. Those who entered the military on or after August 1, 1986 and elected to receive the Career Status Bonus can apply for this plan. Monthly payments are based on the average of the highest 36 months of base salary, with reductions if members do not complete 30 years of service.
– Mixed pension scheme. From 2018, the military implemented the mixed pension system, which provides benefits after 20 years of service. In addition, military personnel are permitted to contribute to a individual retirement plan called the savings plan. Through this plan, members automatically contribute 1% of their salary while in the military. They can contribute more, the military representing up to 5% of the salary per year. When members leave the military, they can choose to transfer the amount to an IRA if they wish. These funds can grow over time and be withdrawn in retirement.
Average military retirement salary
The amount you can expect to receive each month is based on your plan and military status. On average, “you can expect to earn about half of your base salary in retirement,” says Rob Drury, executive director of the Association of Christian Financial Advisors in San Antonio, Texas. “This works out to about $ 30,000 to $ 35,000 per year for a typical enlisted person and about $ 60,000 to $ 70,000 for the typical officer.” These estimates refer to those who have served full time throughout their careers. Members who retire from the reserve can expect retirement pay to be based on rank, seniority and total points earned for periods worked.
Some military websites include a calculator that lets you enter your information and see what to expect in terms of retirement pay. The Ministry of Defense proposes calculators to estimate the benefits based on your military plan.
Military survivor benefits
In retirement, you may choose to pay for a survivor benefit plan, which provides payments for loved ones after the death of service members. “This implies that the member forfeits part of his pension during his lifetime to leave behind a benefit of an amount equal to 55% of anything between $ 300 and the total value of the pension,” says Wayne. Brown, senior partner of Dugan Brown, a federal retirement planning firm in Dublin, Ohio.
This benefit can be left to a spouse, ex-spouse, children or a combination of the three. It could also be granted to someone who qualifies as an “insurable interest,” which could be someone who is financially dependent on you. “The most common of these options is to leave the benefit to a spouse and, if selected, it will cost 6.5% of the member’s pension, deducted monthly,” Brown said. Consider your spouse’s financial dependence on military pay to determine how much might be needed later.
Military medical benefits
After you retire, you can expect to receive military medical coverage. The military health care program for retired military personnel is known as TRICARE. “Not only does this ensure medical coverage for the person who has retired, but it also covers their spouse,” Brown said.
Before retirement, you’ll want to have a medical exam to document any illnesses and chronic issues on your record. “Retired military personnel may also be eligible to receive VA disability benefits,” Brown says. Even if you currently have no health problems, you may receive disability benefits at a later date if you qualify.
Additional benefits for military retirees
If you retire near a military base, you may be able to take advantage of additional services. “Retirees and their families enjoy privileges while stationed at gas stations, police station, PX, Class VI and gymnasiums,” says Andrew D’Amico, military retiree and planning coordinator at Bridgeworth Wealth Management in Huntsville. , Alabama. You may also be eligible to receive financial assistance for dental visits and eye care through the Federal Employee Vision and Dental Insurance Program.
After serving in the military, you may decide to find a job in the civilian sector, especially if you retire in your 40s or 50s. The military provides a variety of services, including the Transition Assistance Program, which helps members make the transition to civilian life and find new careers. Ongoing help in other areas is often also available. “Retired military personnel also have the right to free legal assistance for the rest of their lives,” Brown said. “This can be of great benefit to those looking for help with everything from writing a will, helping getting through a divorce, or understanding contract law for a new business.”