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Military Retirement Planning

Being part of the military is a unique lifestyle, and transitioning to retirement takes some planning. To ensure that your military retirement is as rewarding as possible, it’s important that you prepare for it before, during, and after you get there. Here are our top four tips to guide you through your military retirement planning.

1. Complete the required separation tasks.


The Department of Defense Transition Assistance Program (TAP) website provides detailed information on transition assistance. Here are some things you must do prior to your separation date:

  • Complete an Individualized Initial Counseling and Pre-Separation counseling session at least one year (365 days) prior to your separation date. However, you can schedule this up to two years prior to your retirement date.
  • Attend mandatory briefings on topics such as your VA benefits, transition preparation, and employment preparation.
  • Schedule your final mandatory medical exam with your unit’s medical clinic 90 days prior to separation.

2. Review and update your benefits.


While you may retain many of your military benefits, some will change. Keep these changes in mind as you begin your military retirement planning.

  • TRICARE: When you retire, you must update your enrollment for yourself and your family members to avoid losing your TRICARE benefits. You can learn more about what’s required on the TRICARE website.
  • Dental and/or Vision: You may enroll in the FEDVIP Dental and/or Vision benefits program during the annual open season, which occurs each fall, or if you have a qualifying life event. Both dental and vision plans require monthly premium payments which vary by the plan you select. You can learn more on the BENEFEDS website.
  • Life Insurance: Once you retire, your Servicemembers’ Group Life Insurance (SGLI) plan continues for 120 days after separation, during which you will need to replace it with another plan to maintain coverage without undergoing additional medical screening. The military’s Veterans’ Group Life Insurance (VGLI) is available to all Veterans who had SGLI, but unless your health is a grave concern, VGLI is a very expensive option and the premium will increase significantly every five years. You can also replace your SGLI with an AAFMAA life insurance policy, which is designed for servicemembers and Veterans, and the premium generally costs less for similar coverage to VGLI.

3. Decide where you want to live.


The government will pay for your final move anywhere within the United States. Although you have up to a year after retirement to complete your final move, the sooner you schedule it, the better your chances are of moving during your preferred time frame.

When you are ready to choose your retirement location, you will still qualify to receive one of the most popular military benefits available — the VA mortgage loan, which permits as little as zero down payment and has low-interest rates. Not all mortgage companies are experts in VA Loans, which is why it’s important to work with a lender that specializes in helping servicemembers and Veterans, such as AAFMAA Mortgage Services LLC, a wholly-owned subsidiary of AAFMAA.


4. Establish your retirement budget.


Your military retirement financial benefits include two key components: Your military pension, and your Thrift Savings Plan (TSP). Military pensions are the most important financial benefits provided to retirees and will be a big piece of the military retirement planning puzzle. If you serve more than 20 years, your pension means you’ll receive monthly payments throughout the rest of your life. If you elect to participate in the survivor benefit plan, your spouse (or another qualifying dependent ) will receive a percentage (usually 55% ) of your base pension after your death.

Your monthly pension depends on several factors, such as your rank, the number of years served, and the retirement program you are enrolled in based on when you joined. National Guard and Reservist members’ pensions are based on a point system and will be paid to you when you become eligible. Your pension will also increase with the cost of living.

The TSP is a government-backed retirement savings program that works similarly to a 401(k). Depending on your TSP option, the money you invest can be tax deferred, or if you elect the Roth TSP Option, your investments grow tax free. The military will match up to 5% of your base pay, making it one of the best retirement savings programs available. Upon your eligible retirement age, you can withdraw money from your TSP to supplement your retirement income.

When it comes to your military retirement planning, it’s best to start early by talking with a military financial professional that specializes in retirement and financial planning for servicemembers and Veterans, like the experts at AAFMAA Wealth Management & Trust. Call 910-390-1933.