If you served for several years or decades in the military, you’ll be eligible for retirement benefits when you step back into civilian life.
These perks take on different forms and might include a pension, health coverage and disability benefits. The amount you receive will depend on the length of time you served and your rank in the military.
Here’s what to expect when you retire from the military:
- Retirement pay.
- Survivor benefits.
- Medical benefits.
- Additional benefits.
Military Retirement Pay
The military offers a few retirement plans, so you’ll want to see which one you have and how it works. Typically you need to serve for at least 20 years to receive full retirement pay.
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. The amount is calculated by computing 50% of basic pay after 20 years of service and adding 2.5% for each additional year.
- High-36. This plan is available to those who entered active duty or reserve service between Sept. 8, 1980, and July 31, 1986. Members receive retirement pay that is based on 50% of the average of the highest 36 months of basic pay after 20 years of service. Another 2.5% is given for each additional year.
- Disability. Military members who are determined to be medically unable to continue serving might be eligible for this plan. It calculates a monthly pay based on the level of disability and dependent family members. The retirement pay could be based on the final pay method or the High-36 method, depending on when military service began.
- CSB/REDUX. Those who entered the military on or after Aug. 1, 1986, and before Jan. 1, 2018, have the option to apply for this plan. They receive a $30,000 career status bonus after 15 years of service with an agreement to complete 20 years of service. Retirement pay is based on 40% of the average of the highest 36 months of basic pay after 20 years of service, with an extra 3.5% for every additional year.
- Blended Retirement System. The Blended Retirement System provides monthly retirement pay after at least 20 years of service to those who entered military service in 2018 or later. You’ll receive 40% of your highest 36 months of base pay after 20 years. You’ll also get 2% for each year of service. Beyond this, service members are eligible to contribute to the Thrift Savings Plan and receive automatic and matching contributions. When members leave the military, they can opt to move the amount to an IRA.
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, partner at Dugan Brown Federal Retirement Experts 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, (it) 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.
Before 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 (Veterans Affairs),” 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.
Additional Benefits for Military Retirees
If you retire near a military base, you might be able to take advantage of additional services. “Retirees and their families enjoy on-post privileges from the gas stations, commissary, (post exchange), Class VI (alcohol sales) and gyms,” says Andrew D’Amico, a military retiree and associate advisor at Bridgeworth Wealth Management in Huntsville, Alabama. You may also be eligible to receive financial assistance for dentist visits and eye care through the Federal Employees Dental and Vision Insurance Program.
After serving in the military, you may decide to get a job in the civilian sector, especially if you retire in your 40s or 50s. The military provides various services, including the Transition Assistance Program, which helps service members transition to civilian life and find a new career. Ongoing help in other areas is often available too. “Retired military personnel also have the right to free legal assistance for the rest of their lives,” Brown says. “This can be a big benefit for those who are looking for help with anything from writing their wills, assistance getting through a divorce or understanding contract law for a new business.”
