The True Value of A Military Pension

Join this channel to get access to perks:

Military Retirees are some of the most wealthy Americans. They live at the upper end of the net worth scale and as a result enjoy a unique financial position. The first step to making the most of your pension is to realize just how valuable it is.

#militaryretirement #pensions #financialindependence

Note: The views expressed in this video are the presenter's and do not represent the policy or guidance of the Department of Defense or its subordinate elements.

[Bradimoose]

I know a 95 year old that was an air force electrician. He's been retired for 50 years. Living the dream.

[sandovalperry]

I’m pre-DOPMA so my retired pay is ancient history. However, the medical benefit is what’s really a life-saver. I’m from the generation that recruiters promised “free” healthcare for life but who believes a recruiter. Even with paying into a TRICARE plan you have the flexibility that your civilian counterparts don’t have. You’ll find many of your colleagues would love to quit their jobs but the loss of quality health insurance chains them down. TRICARE may not be perfect but what you and your family receive in costs and benefits gives you the career flexibility that you and your family EARNED.

[civosborne]

I had an old high school friend contact me earlier this year trying to sell me on his company's financial products, and it very much fell into the "trying to save what you have" camp. It was an awkward moment when he was saying he aims for 5% on the high end, and I'm aiming for 10% on the low end with significantly more risk that he'd ever feel comfortable with (I told him jumping out of planes with machine guns will tweak your risk profile).

[joshuathomas]

The biggest value is the health insurance.

[charlesharrington]

Good info. If you live within your means, you can live well with your retirement and SS, not to mention any other retirement income you may have. I thank God I stayed in and retired (2000).

[kenm]

When I joined in 87 I was told by my then LtCol uncle that you won't get rich in the military but you can live very comfortably. Retired in 2018 SCPO (E-8) with 28years under the high-3 50% plan, did not take the sucker offer of cash to switch to the redux plan. Went to work for 7 more years because I bought into the 47 is too young to fully retire and also having tunnel vision on reaching 100% success rate with the Monty Carlo calculators. The 7 additional years being able to invest almost all the pay took us from living comfortably to living a very cushy verging on luxurious life. Between the pension and VA we only touch taxable investments for items like vacations. If SS stays the same then at that time there won't even be a need to touch the taxable or Roth's.

[Artificer-gw]

There is also a difference between active duty and reserve retirement. Reservist retirement is calculated under the point system. Unless a reservist has 20+ years of active service, eligibility does not start until age 60 (mobilizations over 90 days can partially reduce wait time).

[bryantsherman]

One interesting point is the number of retirees "sharing" their retired pay with an ex-spouse, or two. This scenario can easily change an O6 retired pay amount to an O3 or less amount if child support payments are included.

[armymuttA]

I'll be retiring at around 51 or 52. I'm lucky enough to be in a career that can get better pay on the outside than in the military. My plan right now - haven't talked to an advisor about this, or my wife for that matter - is to invest 100% of my pay and VA disability. The goal is to get it to grow to the point that the interest plus the pay equals my salary once I hit 65. I won't be adding any more to it, but depending on how much I need to take out, it will continue to grow.

[stom]

I'm at 22 years of service and intend to push through until 26 unless my family and body can still handle the lifestyle for another assignment or two. At that point, my retirement and investments will have me situated to be a gentleman of leisure, as you call it 😆

[OhNoNotAgain]

Military retirement is great if your 20 year military experience allowed you to build private sector marketable skills without a lot of physical wear and tear on your body. Electrician, air traffic controller, firefighter, HR Specialist, logistics manager, pilot, accountant, computer technician etc. On the other hand, a 20 year infantry type (Special Operations even more) has probably beat up their body and probably doesn’t have a lot of skills the private sector is looking for.

[Rottingboards]

It also depends on which Military Pension you got. They have been drastically decreasing the percent of pension over the years.

[MDavidW]

Thanks Chuck. I figure my retirement is equivalent to over $1M in the bank.

[Calventius]

I was hoping for more detail not just reinforcing the point that a lifetime payout is worth alot. All in all I appreciate your videos.

[flyboymb]

I just did my 20. I started out enlisted and finally decided to commission in 2021. I just jumped up to 2LT retirement pay and will soon make 1LT (the old system takes your top 3 years). I'm going to stick it out until I've at least been a Major for 3 years. Given that I make Captain next May, that means retiring right around 2030 or so. If I really wanted to, I could likely stick it out into my 50s. At this point, I view it as a supplement or replacement for social security. Given that I'm in the Guard, I won't see a penny until I'm 60. I'm really hoping that I'll have enough debt paid down that I'll be able to unofficially retire at that point and just get that monthly check until I reach the official social security retirement point.

[Nikko_Rico]

I was medically retired at just under 16 years. The army gave me 40% and the VA gave me 100% P&T as I lost the use of my foot, lost my ankle, and collarbone was replaced, and several combat tours resulting in PTSD.

They said I will never get the army pension because I didn't get to 20 years. Is that true? I mean why do I get statements from dfas showing me receiving that 40% but never getting it? And when I called when I first got out they told me I don't get it at all. Huh? Confused.

[alansmithee]

Have you ever looked at older entrants (i.e. enlisting or commissioning) over 40 and not being able to retire with pension or how to retire by extending past 60? Is there any hope for over 40 doing so?

[davidkuntze]

Prescription medicine alone is the biggest benefit. My wife and I are pushing 70 and the costs of prescription medicine would kill our budget. But we are able to go to the local military medical facility and get our drugs for free.

[philliplopez]

Understanding the value of a military retirement...

Think of your monthly payment as an anuity.

Now consider that $1, 000, 000.00 invested at 5% rate of return would net you approximately $48, 000.00 per year.

This gives you a realistic way to approximate the "value".

Be certain to account for tax advantage as well.

Add any disability, social security, or special pays as well.

And yes, don't forget to count the cost of medical insurance as part of that "value".

Best of luck,
Phil

[GeoFry]

If you can make it to 20.

Only about 10% make it across the finish line. (Enlisted)

I did it... and retired at 45. I still work, but most of that goes straight into investments. I don't work because I have to. I buy individual stocks here and there, but mostly I have a number of SP 500 funds that pay out dividens monthly/quarterly for my fun money and others in an IRA for my kids.