Is Your Military Pension Enough to Retire On?

Wondering if your military pension is enough to retire on? You’re eligible for military retirement money as early as thirty-seven, and if you’re a career military person, your retirement pension could be enough for you to retire on easily. If you’ve been in the military for twenty years or more, your pension will be a certain percentage of your base pay, and if you’ve got a career of forty years behind you, you’ll get 100% of your basic pay during retirement.

Also, your military retirement pension will come with benefits, which is a huge bonus that means many military men and women can and do retire on their military pensions alone.

Look at the government’s retirement calculators

After August 1986, military individuals can choose one of two retirement systems – the High 36 system or the Career Status Bonus/REDUX system. If you don’t choose, you’ll be automatically enrolled in the High 36 retirement plan. These systems will calculate your base pay differently, and based on that, your retirement pension will be calculated.

Under the High 36 program, your base pay will be based on the average of the highest 36 months basic pay, and you’ll get 2.5% for each year of service with no bonus. With the CBS REDUX system, your basic pay is calculated in the same way, and you’ll get 3.5% of your basic pay for each year of service over twenty years, plus a bonus of $30,000 in cash (which is about $21,000 after taxes).

The systems are complicated, and you need to make sure that you work out how much each would give you for retirement by using the military calculators that you can find at The calculators will help you figure your retirement pay, and you can even customize them to take different retirement situations and economic situations into account.

Factor in COLA

One of the interesting things about military pensions is that they factor in the cost of living and give you a Cost of Living Adjustment that could more than double your check over time. The High 36 system calculates the COLA based on the Consumer Price Index, but the CBS/REDUX system calculates it based on that index minus 1%. Either way, though, the COLA can help stretch your retirement dollars further.

Make your money go further

Even if you think you are set to retire on your military pension, it never hurts to make your money go further. Here are some things you can do to stretch your pension so that you can live out your golden years on your military pension:

· Daniela Baker from CreditDonkey recommends you pay off debts before retirement. Paying off your debts, especially higher interest credit card debts, before you retire can significantly reduce your expenses. If you’re having trouble getting momentum to pay off your credit card debts, consider doing some credit card balance transfers to lower your interest rates and pay off your cards faster. You may even want to try to pay off auto loans before you retire so one less check is coming out of your pension.

· Put your kids through college: Even if you aren’t paying for 100% of your children’s educations, you’ll probably have some extra educational expenses when they’re in college. Getting them through school while you’re still working can be a good way to ensure that you get the most bang for your buck with your pension money once you do retire.

· Downsize or pay off your mortgage: Downsizing before retirement, rather than after as many people do, can help downsize your expenses while you’re still making good money. If you’re still jumping from base to base, consider investing in your retirement home before you retire, and make sure that the payments for your home and upkeep will be well within your monthly income range.

If you’re a career military member, chances are likely that you really can afford to retire on your military pension – as long as you calculate it correctly and get your expenses down before retiring. These tips can help you calculate your pension and make the most of it during your retirement years.

Speak Your Mind