For a military person it is never early to start about retirement and military retirement calculator is a tool that may provide a big deal of assistance in figuring out right parameters for your retirement. You may find it difficult to make calculations, the military retirement calculator can help you determine how much you have to save and for how long to live comfortably after retirement.
Retirement Systems
There are several factors that determine size of the pension that a military person may get after the retirement. One of the main factors is retirement plan that you choose or you are assigned. During last twenty five years the US government made several changes to the retirement system. For each plan there are different military retirement calculators that take into consideration specifics of each plan. Nowadays the situation is the following:
- if you joined army before September 8, 1980, then you are eligible only for Final Pay military retirement plan;
- if you joined army sometime between September 8, 1980 and August 8, 1986, then you are eligible only for High-3 Year Average plan (sometimes also referred as High 36 system);
- if you joined army after August 8, 1986 than you have a choice between High-3 Year Average retirement plan and Career Status Bonus (CSB) – Redux retirement plan. It is noteworthy that if you decline getting Career Status Bonus that is currently $30,000, you will automatically receive High-3 Year Average retirement plan;
As we already noted since retirement plans differ from each other, there are different military retirement calculators for each plan. Variables and approach is very similar for each plan, but the small difference in calculations makes the results differ substantially.
For all plans a person becomes eligible for retirement if he/she serves at the army for 20 years or more. In addition if a person stays at the service for more than 40 years he/she receives 100% of his/her basic pay.
The Cost of Living Adjustment (COLA)
The Cost of Living Adjustment is simply accounting for inflation that is highly important detail, because in many cases the Cost of Living Adjustment may double your retirement earnings. Military retirement calculators usually account for this.
It is noteworthy that the Cost of Living Adjustment for Final Pay and High-3 Year Average plans is the same. It simply uses Consumer Price Index (CPI) as an adjustment basis, while for CSB / Redux retirement plan this adjustment basis is CPI-1%.