Is Military Retirement Pay and Benefits Enough to Live on?

Chelsy Meyer  | 

The military offers a few different retirement options for those that choose to make the military their career, but are those retirement benefits enough for a person to live off of? The answer to that question involves answering many variables that go along with military retirement including how long you stay in the military, when you served, and supplemental savings. Concerns regarding living off retirement savings is not a question specific to military veterans but the pension offered by the military to service member is and you may be wondering, are their retirement options and benefits able to cover all of your costs once you’ve retired?

Military Retirement Options

Whether or not you’re able to live off of your military retirement depends largely on many variables. For instance, there are different retirement options available for each service member. Your overall retirement savings will depend on which of these options apply to you.

  • Twenty Year Eligibility: Once a service member has spent 20 years in the military, they are eligible for retirement. Unlike most other plans, you can start collecting right when you leave the military no matter your age. However, how much your pension is is dependent on your base pay. The longer you stay in, the higher your rank, the higher your pay. If your net monthly pay at 20 years of service is $5,000, your retirement pay might be around half of that if you’re lucky, depending on your type of retirement. Once you take out taxes, health care, and other benefits, your net retirement pay could be around $2,000 (as a very basic estimation). A $24,000 salary is not the easiest income to live off of for many retirees. For that reason, not many veterans serve for 20 years and settle into permanent retirement.
  • Types of Retirement: When you join the military and whether or not you have disability retirement are big variables in retirement options. For those that stay in the military long enough to make it their career and retire as high ranking officers, their retirement benefits climb closer to 100 percent of their pay making it easier to live off of. However, many service members fall into the category of receiving retirement pay for 20 years or more, not full career retirement. For those in that category, their type of retirement, depending on their date of service, will certainly help as a supplementary retirement combination, but probably not as a standalone income.
  • Bonuses and Benefits: Benefits have just as much to offer in terms of livability as a monthly retirement check does. Those that served in the military have VA benefits for the rest of their life, but those that stay in the military for the lifespan of their career are eligible for TRICARE benefits, which are much more comprehensive and affordable. There is a difference between benefits for career military retirees and veterans and career military retirees do maintain some great military benefits that make living on retirement benefits and pay a lot easier. This includes all of the allowances military members get that are factored into actual salary in terms of housing, specialty pay, and cash bonuses.

Making Supplemental Income

For those that choose to accept military retirement after 20 years or close to it, you will probably find yourself searching for post military employment. This involves combining your military retirement with civilian retirement. For those that choose civil service as your post military employment, the process is a bit different. For some, working to earn supplemental income while in retirement from the military might be wise, or even necessary to cover all living expenses.

  • Combining Civilian Retirement and Military Retirement: For those that take retirement benefits after 20 years or close to it, you can combine those retirement benefits with the retirement benefits of your next employer in the same way that you can combine VA health care with private insurance. The monthly retirement pension received would be supplemental to the pay and retirement benefits received from a secondary employer, making it easier to live off of retirement benefits later on.
  • Combining Military Retirement and Federal Civil Service Retirement: Federal civil service jobs are different than most post military jobs because of how they can affect retirement. For those that work as a civil servant after their military retirement, Federal law entitles military veterans who become federal civil service employees to receive credit for their military service by “buying back” their active duty time. The money they pay to the Federal Employees Retirement System pension fund for each year of their active-duty time gives them an additional year of credit toward their FERS pension.

In order to avoid double dipping in retirement, they’d have to reject their retired pay in order to make those years count as part of their civil service pension and increase annuity. This basically combines time together and increases pension later on which may make it easier to live off of retirement pay and benefits. This is not always the best option as military retirement also comes with many other perks as well as benefits for family, but it’s one that needs to be decided if your post military job is in civil service.

  • Working During Retirement: Regardless of when retirement happens for each service member, it’s not unheard of to work during retirement for one reason or another. Even for service members who retire as career military, you may need or want to work during retirement in order to gain some supplementary income or to help combat retirement boredom. Either way, working during retirement is one way to supplement retirement pay with a secondary income.

Additional Retirement Savings Options

Your ability to live off of your retirement depends on so many things. If you’re looking to find a way to live off of your retirement, you may have to go through a few different avenues and combine your retirement savings.

  • Investing Bonuses: Working as a military service member involves many different pay perks and benefits. Some of those include bonuses. There are ways to use things like enlistment bonuses in a way that can increase your savings. If you qualify for the CSB/REDUX retirement option given to service members who serve between August 1, 1986 and December 31, 2017, you get a $30,000 bonus and your retirement percentage is reduced. The new Blended Retirement System (BRS) for those that began service starting in 2018 offers a bonus as well. Investing that bonus as well as your enlistment bonus, or other bonuses received throughout a military career can mean higher retirement savings later on as well.
  • Thrift Savings: The thrift savings option is another way to contribute to a retirement account regardless of your time spent in the military. The BRS offers the thrift savings account where you can save for retirement and the military will match a percentage of it. This is not an option only for new recruits, so you’re able to contribute to it regardless of when you began serving. Having this additional savings will help make retirement benefits a little easier to live on. This is a great option because it helps recruits plan for retirement even if they don’t make it to the full 20 years to be eligible for military pension.
  • Opening Your Own Retirement Account: You don’t have to rely on the military pension or thrift savings plan in order to save for retirement. You can begin saving for retirement on your own at any time by opening your own retirement account. You can start a Roth IRA on your own and contribute to it as a supplemental form of retirement savings, or even combine it later on. There really isn’t much of a chance of saving too much for retirement, so any additional savings is helpful.

Is military retirement pay and benefits enough to live on? It’s a hard question to answer. It depends on how much your pension is and how much your living expenses are. The short answer is that unless you’re retiring as a career military veteran receiving close to 100 percent of your base pay and stellar benefits, you probably won’t be able to live on your retirement pension. You may be eligible for retirement pay after 20 years of service, but that doesn’t mean you’ll be able to completely stop working and live off of it forever. Chances are you’ll want to combine that retirement check with something else like supplemental income or other retirement saving options.

For guides, visit our military financial education center.


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Chelsy is a writer from Montana who now lives in Boise, Idaho. She graduated with her journalism degree from the University of Montana in 2012. She enjoys talk radio, cold coffee, and playing Frisbee with her dog, Titan. Follow Chelsy on Twitter @Chelsy5

This post was updated January 10, 2018. It was originally published December 28, 2017.