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If you plan to leave the military, here is the average retirement income for Military retirement pay you can expect to receive. Expect from “around $30,000 to $35,000 per year for a typical enlisted person and around $60,000 to $70,000 for the typical officer.” These estimates refer to those who have served full time active duty for their entire career.
Military offers you retirement benefits when you decide to leave military after years of dedicated service. When you retire to become a civilian there are retirement income which is something we categorize under a pension, health coverage and disability benefits.
However, when you retire from the military, the specific amount you receive will depend on the length of time you served and your rank in the military. Before we continue, I will like to mention military retirement plans.
The military retirement plans include:
- Final Pay. Military members who began their years of active duty or reserve service before Sept. 8, 1980, are eligible for a retirement pension that is based on their final basic pay.
- High-36. This plan is available to those who entered active duty or reserve service after Sept. 7, 1980. Members receive retirement pay that is based on the average of the highest 36 months of basic pay.
- Disability. Military members who are determined to be medically unable to continue serving and have a Department of Defense disability rating of at least 30% might be eligible for this plan. It calculates a monthly pay based either on the Final Pay or High-36 Plan, depending on which plan is appropriate.
- CBS/REDUX. Those who entered the military on or after Aug. 1, 1986, and elected to receive the Career Status Bonus may apply for this plan. The monthly payments are based on the average of the highest 36 months of basic pay, with reductions made if members do not complete 30 years of service.
- Blended Retirement System. Beginning in 2018, the military established the Blended Retirement System, which provides benefits at 20 years of service. In addition, service members are allowed to contribute to an individual retirement plan called the Thrift Savings Plan. Through this plan, members automatically contribute 1% of their salary while in the military. They can contribute more, with the military matching up to 5% of salary per year. When members leave the military, they can opt to move the amount to an IRA if they choose. These funds can grow over time and be withdrawn at retirement.
Average Military Retirement Pay
The amount you can expect to receive every month is based on your plan and military status. On average, “one can expect to collect about one half of one’s base pay upon retirement,” says Rob Drury, executive director at the Association of Christian Financial Advisors in San Antonio, Texas. “That equates to around $30,000 to $35,000 per year for a typical enlisted person and around $60,000 to $70,000 for the typical officer.” These estimates refer to those who have served full time active duty for their entire career. Members retiring from the reserve can expect the retirement pay to be based on grade, tenure and total points earned for the periods worked.
Some military websites include a calculator that allows you to enter your information and see what to expect in terms of retirement pay. The Department of Defense offers calculators to estimate benefits based on your military plan.
Military Survivor Benefits
At retirement, you might choose to pay for a Survivor Benefit Plan, which provides payments for loved ones after the death of military members. “This involves the service member giving up a portion of their pension while they’re alive to leave behind a benefit in the amount equal to 55% of anything between $300 and the full value of the pension,” says Wayne Brown, senior partner of Dugan Brown, a federal retirement planning firm in Dublin, Ohio.
This benefit might be left for a spouse, a former spouse, children or a combination of the three. It could also be given to an individual who qualifies as an “insurable interest,” which might 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, will cost 6.5% of the service member’s pension, deducted monthly,” Brown says. Consider how financially dependent your spouse is on the military pay to determine what amount might be needed later.
Military Medical Benefits
After retiring, you can expect to receive military medical coverage. The military’s health care program for retired service members is known as TRICARE. “Not only does this guarantee medical coverage for the individual who retired, but it also covers their spouse as well,” Brown says.
Prior to retirement, you’ll want to have a medical exam to document any ailments and chronic issues in your file. “Retired service members may also be eligible to receive disability benefits from the VA,” Brown says. Even if you don’t currently have health conditions, you could receive disability-based benefits at a later date if you are eligible.
