Military Life Resources Finance

Operation Golden Years: Planning for military retirement

As you near the end of your military service, Operation Golden Years becomes the mission you must carefully plan and execute retirement.
Jessica Evans Avatar
military retirement
Gunnery Sgt. Evans Janvier embraces a friend at his retirement ceremony aboard Marine Corps Air Station Beaufort.

As you near the end of your military service, Operation Golden Years becomes the mission you must carefully plan and execute. Equip yourself with the knowledge and resources necessary to secure your future after military retirement.

Transitioning from active duty to retirement can be a daunting challenge. While the military has provided a stable career and structure, there’s a lot to consider when planning your post-service life. It’s never too early to start planning on what you’ll be doing after you leave the military.

Mission briefing: retirement benefits

The first step in preparing for Operation Golden Years is understanding your military retirement benefits. The DoD currently offers three distinct retirement options that provide you with a lifetime annuity after you leave active duty. These systems are the Final Pay Retirement System, the High-3 Retirement System and the Blended Retirement System.

The Final Pay Retirement System (FPRS) is only for those who entered service before September 8, 1980. So, chances are you’re not actively serving with anyone who qualifies for this system. However, there are plenty of retirees still benefiting from the FPRS. This system is based on a service member’s final basic pay. The amount received is calculated by multiplying the number of years in service by 2.5% for every year of service. That means if a service member was in for 20, they’d receive 50% of their final basic pay.

Next is the High-3 Retirement System. Like the FPRS, it’s based on the number of years in service. Your High-3 is the highest salary you earned over the last three years of service. So if you make E6 and drop your retirement packet, you’ll need to serve as an E6 for 3 years to get 50% of that salary.

The newest option is the Blended Retirement System, introduced in 2018. This system combines a traditional pension with a 401(k)-style defined contribution plan. It’s like the High-3 but you can also contribute to a Thrift Savings Plan (TSP), too. Those who serve for at least 20 years receive a lifetime annuity based on the High-3 average pay, as well as a TSP account that they can use to supplement their retirement income.

navy military retirement
U.S. Navy Chief Warrant Officer 3 Nicholas Hess, assigned to the aircraft carrier USS John C. Stennis (CVN 74), renders a salute at his retirement ceremony, after 23 years of service, in Smithfield, Virginia, July 1, 2022. (U.S. Navy photo by Mass Communication Specialist Third Class Riley Gasdia)

Recon: Assessing your financial landscape

Before embarking on this new chapter of your life, you have to get a clear vision of where you are financially and where you want to be. This financial recon involves taking a comprehensive look at your income, expenses, debts, and savings.

The first step is to evaluate your income. Determine how much money you make each month, and where it comes from. This may include your salary, bonuses, allowances, or any other sources of income. If you have a spouse or partner, it is important to factor in their income as well.

Next, evaluate your expenses. Create a budget that outlines all of your monthly expenses, including rent or mortgage payments, utilities, food, transportation, and other bills. Take note of any expenses that are likely to change as you transition to civilian life, such as healthcare costs.

In addition to evaluating your income and expenses, it is important to assess your debts. Make a list of all outstanding debts, including credit card balances, car loans, student loans, and any other obligations. Determine the total amount owed, the interest rates, and the monthly payment amounts.

Finally, take a look at your savings. Determine how much money you have saved for retirement, emergency expenses, and other long-term goals. Evaluate your investments and consider if they are aligned with your goals.

Once you have evaluated your financial situation, you can determine how much you’ll need to save to maintain your desired lifestyle in retirement. This may involve adjusting your budget, reducing expenses, increasing income, and developing a savings plan that aligns with your goals.

Logistical planning: Healthcare and housing

As you gear up for Operation Golden Years, don’t overlook the importance of healthcare and housing in your retirement plan.

TRICARE is the military health insurance that you can use, but you need to pick the right plan based on your needs. Remember to factor in potential out-of-pocket costs, too.

When it comes to housing, you have a few options to consider. Depending on where you ETS, you might be able to remain inside the gates in military housing. Of course, that might include a wait list and you won’t be at the top of it. Another option is to buy a home using the VA loan. This loan can be a great option because it requires no down payment and has lower interest rates.

To make sure you have a successful retirement, it’s important to plan ahead and budget for healthcare and housing costs. Take the time to evaluate your options and choose what works best for you.

Intel: Maximizing your savings and investments

military retirement awards
These are the awards and certificates which were presented to Chaplain (Col) Joseph Burton, command chaplain of the U.S. Army Reserve 88th Readiness Division, Fort McCoy, Wis., in a retirement ceremony Jan. 9, 2022 at the division headquarters on the fort. (U.S. Army Reserve photo by Sgt. 1st Class Clinton Wood)

Securing a comfortable retirement requires a smart approach to savings and investments. Maximizing your savings and investments is essential for creating a sustainable income stream that will support you throughout your golden years. Here are a few ways to optimize your savings and investments:

Thrift Savings Plan: The Thrift Savings Plan (TSP) is a defined-contribution retirement savings plan available to military personnel and federal employees. To maximize your TSP contributions, it’s important to contribute the maximum allowable amount each year. The Department of Defense also offers matching contributions, so make sure to take advantage of this benefit.

Roth IRA: Another way to maximize your retirement savings is to consider opening a Roth IRA. This type of retirement account offers tax-free growth and withdrawals in retirement. You can contribute up to $6,000 per year, and if you’re over age 50, you can contribute an additional $1,000 per year.

529 plans: If you plan on helping your children or grandchildren with education expenses, start contributing to a 529 plan. These plans offer tax advantages and can help cover the costs of college or other higher education expenses. Some states offer tax deductions or credits for contributions, so make sure to check with your state’s plan.

In addition to these specific strategies, it’s important to diversify your investments across different asset classes, such as stocks, bonds, and real estate. You may also consider working with a financial advisor to help create a personalized investment strategy that aligns with your goals and risk tolerance.

Execute Operation Golden Years with precision

Preparing for military retirement is a crucial mission that requires careful planning, strategic thinking, and foresight. By examining your retirement benefits, conducting a thorough financial checkup, and making informed decisions about healthcare, housing, and investments, you can set yourself up for a successful post-service life.

As you embark on Operation Golden Years, remember that your discipline, resilience, and adaptability have been tested and proven in your military career. Use these strengths to help you transition to civilian life, and rely on the camaraderie and support of your fellow service members as you navigate this new chapter together.

With thorough planning, dedication, and the right resources, you can execute Operation Golden Years with the same precision and success as your previous military missions. And remember, your service to your country has earned you the right to enjoy a comfortable, fulfilling retirement.

So don’t leave your military retirement to chance – start planning today. Take advantage of the resources available to you, including retirement benefits, financial advisors, and veteran support networks. By doing so, you can ensure that you achieve the retirement you deserve after a lifetime of dedicated service to our country.