Money Schooling

A military retirement calculator is a special online tool designed to help people in the military plan for their retirement.

There are three types of retirement systems available for retiring military personnel and are available to those who have been on active duty for 20 years or more.

Which retirement system is applicable to an individual, is determined by what date that individual joined military service. The start date also determines whether a choice can be made or not on which retirement system applies.

Each of the following retirement systems use a military retirement calculator that is specific to that system -

* Final Pay
* High-3 Year Average
* REDUX

Each military retirement calculator estimates eligible pay during retirement years. Information input can be varied according to different retirement expectations and current economic information.

Final Pay Calculator

This system is applicable to personnel who entered service before September 8, 1980.

The following information can be input – expected retirement grade, years of service and age, which then estimates retirement pay. Some variation of the results can be achieved by applying different economic assumptions such as inflation, annual active duty pay raise and tax rate.

High-3 Year Calculator

The High-3 year average retirement system applies to personnel who entered service on or after September 8, 1980 and before August 1, 1986 or to personnel who entered service on or after August 1, 1986 and chose this plan without accepting a ‘career status bonus’.

The same kinds of information and variation options used in the Final Pay calculator can be entered into this calculator

REDUX Calculator

This system applies only to personnel who join the service after July 31, 1986 and offers a lump sum career status bonus in exchange for a reduced pension.

Eligible personnel are able to make a choice between this system and the High-3 year system and a military retirement calculator is available to help make the choice between the two systems.

Expected income payable under the Final Pay and High 3 systems are annually increased according to the value of the consumer price index. The Redux system is also cost of living protected but at a percentage slightly lower than that available with the other two systems.

Each online military retirement calculator has the ability to print or save information that is generated during an online session. This is useful when reviewing the information at a later date.

During the first few years of service, retirement income may not be high on everyone’s list of concerns. However, as their career in the military advances, figuring out retirement income with a military retirement calculator can help a person plan for the future. Retirement income for retired military is similar to civilian calculations, and they should include the same variables.

Start with your age, and the age at which you plan to retire. In the military, you can consider the number of years of service and know what percent of your pay you will receive upon retirement after an established number of years. Using these numbers in a military retirement calculator you can figure if you will have to find another job, or can stay home and relax. Most calculators do not include the final year you work when computing income. For example, if you plan to retire at age 65, the last year of earnings you should consider is for year 64.

When you consider income, do not forget to include your spouse’s income in the household totals and any amounts your married spouse has in their own retirement savings account. Individual retirement accounts should also be included in the military retirement calculator when calculating the current retirement savings amount.

Future Earnings Estimates Are Questionable

The earnings you realize from your current investments are questionable, at best and depending on where your savings are being held will play a significant role in its growth. A military retirement calculator can work with known numbers, but the variables in interest rates and potential for losses in market investments can make your savings plan volatile. While savings accounts are typically safe and consistent, their returns are also considerably lower that investments. Stock trading on the other hand can be rewarding, financially, they can also take a large chunk of your initial investment in a down market.

For post-retirement expenses, it is generally calculated that 90 percent of your last year’s salary will be what you will spend on living expenses. When using your military retirement calculator by knowing what your total savings should be upon retirement, and calculating how many years you can live on the balance, can help you determine how much more you need to save in order to survive. Knowing the amount of money you are looking to save can help you calculate the amount each month you have to put away, figuring in your expected growth rate.