Discover the comprehensive timeline for military retirement. Review what you need to do in the 3 years before retiring to ensure a smooth transition.
Comprehensive Timeline for Military Retirement Pay
Understanding military retirement benefits and pay options is crucial for service members planning their future after active duty. The military retirement system offers a range of benefits designed to support retirees as they transition to civilian life. This timeline will highlight the main steps to take in the final 3 years before retiring. After than, there is a quick overview of the key components of military retirement pay. For more information about calculating military retirement pay, check out this article about the workings of the Blended Retirement System (BRS).
Also take advantage of our free Thrift Savings Plan Calculator, made for civilian and military federal employees.
36 Months Before Retiring from US Military: Start Planning
When you are three years away from being eligible for military retirement pay, it is a good time to begin preparation. Determining where you’re going to live in retirement can have significant tax implications as some states tax military retirement benefits as ordinary income. Deciding on a specific retirement date is also advised. You should also begin gathering resources you’ll need to complete the application.
Action Steps to Start Retirement Planning
The preliminary stages of mapping out your retirement are all about decision. Creating a “major decision timeline” is often advisable to stay organized. Knowing what you’re going to do after the military is also important. Not just where you will live, but also try to determine if you still plan to work outside of the military or federal government. If you are already in a civilian federal position, forgoing your military retirement benefit to bolster your FERS pension might be something to look into at this point in the process. The earlier you make your military deposit into FERS, the better due to interest owed on the deposit piling up. Now might be a good time to set up a new savings account at your bank, or a conservative investment account with your financial advisor, to ensure the transition into retirement goes smoothly.
Need a financial planner to help you meet your retirement goals? Meet with Us.
24 to 18 Months Before Retirement: Get Focused
There is currently a “pilot” program in effect for active duty Army personnel. Until expiring at the end of March 2025, active duty members of the US Army are allowed to submit their retirement application to DFAS up to 24 months before their approved retirement date. Other branches of the military recommend that 2 years prior to retiring is a good time to start planning if you haven’t already done so.
Permanent Change of Station and Retirement Prep
A PCS (permanent change of station) move before retirement is when a servicemember is relocated to a military base that is close to the location they wish to live in after retiring. This helps the transition into civilian life and can be requested two years before retiring, in most cases. Another important step in this timeframe is to ensure you complete any outstanding required service obligations and attend a mandatory retirement planning seminar. This is also a good time to see if there is an available transition assistance office for your military branch. In the Army, the TAP (transition assistance program) can help prepare you for retirement from the military, provide a retired pay estimate, and help locate a seminar that fulfills the requirement.
18 to 12 Months Out: Figure Out Health and Life Insurance
If not playing catch-up to accomplish the previous items in this article, then this period of time is optimal for getting your health insurance coverage in order. Determine what insurance program and health plan will be best for you after you retire. Making sure you have sufficient life insurance and survivor benefits is also not a bad idea, and be sure to get any dental and vision care you need while still actively serving.
What you plan to do after you retire from the military is also significant and this time can be utilized to make that switch easier. If you want to get a higher education, complete some college applications. Search for networking opportunities if you think you’ll be working once out of uniformed service.
One Year to Six Months Prior to Retiring from US Military
Almost there! With one year or less left, you should submit the military retirement application if you haven’t yet. There should also be a pre-separation transition checklist to complete during this time. Items on that checklist can include completing a post-retirement interview, receiving post-separation attire, and finalizing your administrative absence and terminal leave plan. If you plan on working after you leave the military, moving from networking to active job hunting should now be a priority.
Countdown to Retirement and Your Retirement Month
As the retirement date draws nearer, there will be a lot going on, but don’t forget to apply for TRICARE health benefits and VGLI (Veterans Group Life Insurance) if you plan on receiving those benefits. Also, if you have a disability due to an injury experienced during combat, you might be eligible to apply for CSRC (Combat-Related Special Compensation). This also might be a great time to evaluate your financial plan and see an estate lawyer about updating your will and POA (power of attorney).
Within the last month. you should complete out-processing with form DD-214 and receive your new retired military ID cards and health records as well. There might be a retirement ceremony to attend. You lastly could need an HHG (household goods) move to get your personal items to a new home, and that new job might be starting before your official retirement date. Good luck with the transition into retirement and thank you for your service! You are now a military retiree!
Knowledge is Confidence!
What Are the Key Components of Military Retirement Pay?
The main components of Military Retirement Pay are years of service at retirement (creditable service), the high-3 salary (highest 36 months of basic pay), and a retirement multiplier, which is either 2.5 percent (legacy retirement system) or 2.0% (blended retirement system, which includes the TSP). 20 years of service are typically required before eligible for retirement pay. Guard and Reserve members are not eligible until age 60.
How Does the Cost of Living Adjustment Affect Retirement Pay?
The cost of living adjustment (COLA) is an essential mechanism that ensures military retirement pay keeps pace with inflation. Each year, the Department of Defense (DoD) adjusts retirement pay based on changes in the consumer price index. This adjustment helps maintain the purchasing power of retirees, ensuring that their benefits remain adequate to meet their needs. The COLA is a vital component of the military retirement system, providing financial stability for retirees in the face of economic fluctuations. The previous COLA went into effect on January 1 2024.
How Does the Thrift Savings Plan Fit into the BRS?
The Thrift Savings Plan (TSP) is a crucial element of the Blended Retirement System. It is a government-sponsored retirement savings plan that allows service members to contribute a portion of their basic pay to a retirement account. Under the BRS, the DoD matches contributions up to a certain percentage, encouraging service members to save for their future. The TSP offers a range of investment options, allowing service members to tailor their retirement savings to their individual needs and risk tolerance. The inclusion of the TSP in the BRS provides a valuable opportunity for service members to build a robust retirement nest egg.
Learn more about the TSP at a free retirement webinar for federal employees.
What Options are Available for Active Duty Service Members?
How Can Service Members Maximize Their Retirement Benefits?
Active duty service members have several options to maximize their retirement benefits. One key strategy is to take full advantage of the Thrift Savings Plan by contributing the maximum allowable amount and benefiting from the DoD’s matching contributions. Additionally, service members should consider the Survivor Benefit Plan, which provides financial protection for their families in the event of their death. By carefully planning and utilizing available resources, service members can ensure a secure and prosperous retirement.
How Does Disability Retirement Work and Who Qualifies?
Disability retirement is a benefit available to service members who are medically retired due to a service-connected disability. To qualify for disability retirement, a service member must have a disability rating from the DoD and meet certain criteria related to their years of service and the severity of their disability. Disability retirement provides financial support for service members who are unable to continue their military service due to medical reasons, ensuring they receive the benefits they deserve.
Reach Out to Us!
If you have additional federal benefit questions, contact our team of CERTIFIED FINANCIAL PLANNER™ (CFP®) and Chartered Federal Employee Benefits Consultants (ChFEBC℠). At PlanWell, we are federal employee financial advisors with a focus on retirement planning. Learn more about our process designed for the career fed.
Preparing for federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars here! Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting here.