We already talked about the military retirement calculator, about its categories and the way it works. Let me briefly repeat in a descriptive way the existent types of military retirement calculators and then refer directly to the concept of the Thrift Savings Plan.
The most important thing is to remember that if you have 20 years of credible service in the military you are entitled to retire. Upon the completion of 20 years of credible service you can start thinking which military retirement calculator will better suit your situation. Overall, the choice of the specific type of military retirement calculator depends on the military retirement plan you chose and this itself depends on the day of entrance into the military service.
There are three types of military retirement calculators:
Final Pay system applies if you entered the military service before 09.08.1980. Each year of your service amounts to 2.5% towards the retirement multiplier up to a maximum of 75%. A Cost-of-Living Adjustments (COLA) will be given annually based upon the Consumer Price Index.
High-3 Year Average represents the most common category nowadays. If you entered the military service starting with 09.08.1980 you can choose this type of military retirement calculator to determine your retired pay. In addition, a Cost-of-Living Adjustments will be given annually based upon the Consumer Price Index. By the way there are some new adjustments in retired pay which are effective 12.01.2009, so you should check them out.
REDUX applies if you entered the military service starting with 08.01.1986 and if you are elected to receive the Career Status Bonus. Each year of the first 20 years of your military service amounts to 2% towards the retirement multiplier, and each year after 20 amounts to 3.5%. Then the multiplier applies in relation to the average basic pay for the highest 3 years. A Cost-of-Living Adjustments will be given annually based upon the Consumer Price Index but with 1% lower.
Thrift Savings Plan
Even from the name of the Plan it is clear that this is about savings. Indeed the Thrift Savings Plan represents a retirement saving system for servicemen of the military and the civilians whose employer is the American Government. The system is administered by a special governmental agency called The Federal Retirement Thrift Investment Board. The main goal of this system is to provide the retirees with the retirement income. In order to participate in this saving plan and consequently to benefit from it you have to contribute with a certain percentage from your basic pay. Moreover, your contributions to the Thrift Savings Plan do not affect in any way your right under law to receive the military retired pay.