If you have served in the military for several years or decades, when you return to civilian life you will …
If you have served in the military for several years or decades, you are entitled to retirement benefits when you return to civilian life. These benefits can take different forms and can include a pension, health insurance and disability benefits. The exact amount you will receive depends on your length of service and your rank in the military.
What to expect when you retire from the military:
– pension payment.
– Benefits for survivors.
– Medical benefits.
– Additional benefits.
– IRA opportunities.
Military retirement benefits
The military offers some retirement plans so be sure to see which one you have and how it works. Typically, you must have served at least 20 years to qualify for full retirement.
The military retirement plans include:
– Final payment. Members of the military who started their years of service or reserve before September 8, 1980 are entitled to an old-age pension based on their last basic salary.
– High-36. This plan is available to those who entered active service or reserve service after September 7, 1980. Members receive a pension based on the average of the maximum 36 months of the base salary.
– Disability. Military service personnel who are medically unable to continue their service and who have a U.S. Department of Defense disability of at least 30% may be eligible for this plan. It calculates a monthly payment based on the Final Pay or High-36 plan, whichever plan is appropriate.
– CBS / REDUX. Individuals who joined the military on or after August 1, 1986 and who opted for the Career Status Bonus may apply for this plan. Monthly payments are based on the average of the highest 36 months of base salary, with reductions if members fail to meet 30 years of service.
– Mixed pension system. As of 2018, the military introduced the Blended Retirement System, which offers benefits after 20 years of service. In addition, service members can contribute to an individual retirement plan called the Thrift Savings Plan. Through this plan, members automatically pay 1% of their salary while in the military. You can contribute more, with the military contributing up to 5% of the salary per year. When members leave the military, they can transfer the amount to an IRA if they wish. These funds can grow over time and be withdrawn upon retirement.
[Read: How to Max Out Your 401(k) in 2021.]
Average military retirement benefit
The amount you can expect each month depends on your plan and military status. On average, “you can expect to get about half your base salary when you retire,” said Rob Drury, executive director of the Association of Christian Financial Advisors in San Antonio, Texas. “That equates to about $ 30,000 to $ 35,000 a year for a typical crew and about $ 60,000 to $ 70,000 a year for a typical officer.” These estimates refer to those who have been in active service full-time throughout their careers. Members leaving the reserve can expect the retirement pension to be based on grade, tenure and total hours worked.
Some military websites include a calculator that you can use to enter your information and see what to expect in terms of retirement benefits. The Department of Defense offers calculators to estimate performance based on your military plan.
Military Survivor Benefits
When you retire, you can opt for a Survivor Benefit Plan, which provides payments to loved ones after the death of members of the military. “In doing so, the service member gives up a portion of their pension while they are alive to leave a benefit equal to 55% of anything between $ 300 and the full value of the pension,” said Wayne Brown, senior partner of Dugan Brown, a government agency Pension planning firm in Dublin, Ohio.
This benefit can remain with a spouse, ex-spouse, children, or a combination of the three. It could also be given to someone who qualifies as an “insurable interest” who may be financially dependent on you. “The most common of these options is to have a spouse do the service and, if selected, cost 6.5% of the service member’s pension, which is deducted monthly,” says Brown. Consider how financially your spouse is dependent on military money to determine what amount will be needed later.
[Read: Medicare Enrollment Deadlines You Shouldn’t Miss.]
Military medical services
You can count on military health insurance after you retire. The military’s health care program for retired military personnel is known as TRICARE. “This not only guarantees medical care for the retired person, but also their spouse,” says Brown.
Before you retire, you should undergo a medical examination to keep a record of all ailments and chronic problems on your record. “Retired service members may also be eligible for disability benefits from the VA,” Brown says. Even if you do not currently have any health problems, you can receive disability benefits at a later date if you are entitled to it.
[READ: The Financial Perks of Growing Older.]
Additional benefits for military retirees
If you retreat near a military base, you may be able to obtain additional services. “Retirees and their families enjoy on-post privileges from gas stations, commissioners, PX, Class VI, and gyms,” said Andrew D’Amico, a military retiree and planning coordinator at Bridgeworth Wealth Management in Huntsville, Alabama. You may also be eligible for financial assistance for dental visits and eye care through the Federal Employees Dental and Vision Insurance Program.
After military service, you can choose to work in the civil sector, especially if you retire at 40 or 50. The military offers a variety of services, including the Transition Assistance Program, which helps soldiers transition into civilian life and find a new career. There is often ongoing help in other areas as well. “Retired military personnel also have the right to free legal aid for the rest of their lives,” says Brown. “This can be a huge benefit for those looking for help writing their will, divorce, or understanding contract law for a new business.”
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How much will i get if i retire from the military? originally appeared on usnews.com
Update 11/8/21: This story was published earlier and has been updated with new information.