Retirement is an exciting life milestone that requires careful planning and budgeting. For military families, it requires even more knowledge, because you need to ensure that you meet all the military's qualifications and that you are taking full advantage of any veterans benefits coming your way.
To celebrate National Veteran and Military Family Month, in November, let's look at what military families need to know when approaching retirement planning, including how to make the most out of your benefits and how to live a comfortable civilian life.
Transition Assistance Program
The first thing to know when retiring from the military is that you will likely need to go through the Transition Assistance Program, or TAP. TAP is a program that provides information, tools, and training to make your retirement as seamless as possible. Some of these training resources are optional, but some are mandatory before leaving the military.1
In the mandatory requirements, you may need to:
- Complete an individualized initial counseling session
- Complete the pre-separation counseling brief
- Attend a mandatory briefing on transition preparation and your benefits
- Have a final medical exam
- Schedule your final move1
These requirements may be based on your individual circumstances, and each branch of the military has its own specific information. Check out the TAP website to find out everything you need to know.1
The most important part of retirement planning for anyone, including veterans and their families, is income planning. The goal of retirement-income planning is to have enough money to last through your retirement years. To do this, you need to understand your income sources and establish a budget accordingly.
There are a few different retirement pay options for military members and their families.
For service members with an entry date prior to September 8, 1980, you will receive a final basic pay. This is a defined benefit that equals “2.5% times the number of years of service times the member's final basic pay on the day of retirement.”2
For service members with an entry date between Sept. 8, 1980, and July 31, 1986, you will receive “High 36,” which is a “defined benefit that equals 2.5% times the number of years of service times the average of the member's highest 36 months of basic pay.” This retirement pay is also applicable to service members with entry dates after Aug. 1, 1986, and before Jan. 1, 2018, who did not choose REDUX or opt into the Blended Retirement System.2
Lastly, the military offers the Blended Retirement System. More than half a million service members are covered by the BRS. This system combines elements of the legacy retirement system with benefits similar to those offered in many civilian 401(k) plans.2
As you build your post-retirement budget, it's important to know how much money you will be earning in retirement. In addition to the plans listed above, military families should consider taxes, annual adjustments, and Social Security benefits.
Medical expenses are a huge consideration in retirement. Luckily, as a veteran, you have access to insurance plans for yourself and your family.
The main one is TRICARE, but you must enroll yourself and eligible family members so you don't lose these benefits. The TRICARE website has a lot of good information, including how to enroll and your health plan options. You must enroll in a TRICARE plan within 90 days of retirement.3
In addition to TRICARE, you may need to enroll in dental and vision insurance. You can do this through the Federal Employee Dental and Vision Insurance Program (FEDVIP). FEDVIP is a voluntary program that allows you to choose from among 12 dental carriers and 5 vision carriers. How much you pay for these programs will depend on which ones you choose.3
As we celebrate National Veteran and Military Families Month and recognize all the hard work and sacrifice of our military members, we want to share as much information as possible so you can retire with ease.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.