I love it when people are thinking ahead, and making decisions based upon actual facts rather than just random ideas or something that their barracks-mate told them.
Dear Kate, I have a friend in the Marines. He has served for 9 years and is trying to decide whether to stay in the military.
We've been trying to figure out his retirement pay. I estimate his highest three year average will be $60,000. Is it true that his take home retirement pay would be approximately $1,900 per month? And then $450 for health insurance? Then another $40 for life insurance.
That doesn't seem like much. Am I missing something? Thank you, EOJ The concept of "much" is a very subjective thing, so I can't answer that question. But I have discussed almost this exact situation in a previous article.
Dear EOJ, It is almost impossible to do an accurate prediction of take-home military retirement pay without knowing the person's overall tax situation, state of residence, whether they are purchasing benefits for a family or just themselves, etc.
I wrote a post using almost your exact example, because is a pretty common retirement paygrade and time in service estimate. $60,000 per year average high three pay equals $2,500 gross monthly retirement pay. If there is no other income or other tax considerations, taxes may be roughly $170 per month. (Most people pay more because they pursue another career after their military service.) Tricare Prime health insurance is another $47 per month; Tricare dental, if elected, averages about $125 per month. The Survivor Benefit Plan, if full coverage is elected, would cost $162 per month.
Therefore, after deductions for medical, dental, and SBP, and average taxes, the net retirement check would be just shy of $2000 per month.
You can see the full article here: https://paycheck-chronicles.military.com/2016/02/22/how-much-is-military-retirement-pay/ I'm certainly not a position to judge whether that is high or low. It is the retirement plan, and has been for decades. Most people consider it to be generous, since the "retiree" begins receiving retirement pay immediately, it is guaranteed for the retiree's lifetime, and it is adjusted for inflation each year. The value of military retirement pay generally starts over a million dollars: http://the-military-guide.com/present-value-estimate-of-a-military-pension/ In addition, because military retirement requires only 20 years of service, military retirees have the option to pursue a 2nd career after service.
Life insurance costs will vary dramatically based upon the amount, the term, the age of purchase, and the insured's health history. I hope that answers your questions.
Kate Have you figured out how much your military retirement pay will be? Did it match up with the amount that you had in your head?
And do you think military retirees are receive enough retirement pay, or too much?