Is Military Retirement Pay Enough to Retire On?

Military retirees have one of the best pension plans in the US. After only 20 years, military retirees can retire with 50% of their basic pay, full medical coverage, and a slew of other benefits that will stay with them throughout the remainder of their lives. It is not a stretch to say that a military retirement is worth millions over the life of the retiree.

Considering that one can begin receiving retirement benefits around age 40 and potentially receive the benefits for another 40 years or more, this is an extremely good deal. But is it enough to live off for the rest of your life?

Can you live off military retirement?

For most people retiring from the military services after 20 years, the answer is most likely “no.” A military retirement is fairly generous compared to most civilian retirement plans, and can even be worth millions over the life of the retiree. However, the immediate cash flow is probably not enough for most people to retire immediately, especially for many retired enlisted military members who bring in $20,000-$30,000 per year.

Living on military retirement pay becomes even more difficult if you have a mortgage, credit card debt, a car loan, and other regular payments. I many cases, a military pension is a great financial blessing, but it may not be enough to live on.

Making it work – living off military retirement pay

Not everyone can make a living from a military pension, but there are some people who are able to do it. One example is an enlisted couple who both retired from the military and had their story featured in CNN Money. They both are military retirees who will receive a combined $58,500 per year in military retirement pay, in addition to other military retiree benefits such as medical care. This is not a bad sum of money for not doing anymore work for the remainder of their lives!

Even with their retirement pay and health benefits, there are some potential roadblocks to their plan not to work anymore. Their retirement pay currently covers their fixed costs including their mortgage and other regular bills. But it won’t give them a lot of freedom if they need to support their children through college, or have many unexpected large expenses arise. Even something like taking a family vacation will need to be carefully planned.

I think it may be possible for them to do it, but I imagine that after awhile they will want to find some source of work to keep them occupied. It may not be a traditional 9-5 job, but it may be a part time job, or a hobby that provides them income.

The most important thing about their situation is this: their military retirement pay and benefits are giving them the option and freedom to decide whether or not they work. The freedom of bringing in $58,500 per year without doing anything else gives them the opportunity to work, or choose more rewarding work if they decide to do that. That is a beautiful thing!

How to stretch your military retirement pay

The key to being able to retire on your military pension is paying off as many loans and credit cards as possible before you officially retire from the military. Debt is the quickest way to enslave yourself and tie up your future pension checks. But eliminating your debt gives you the opportunity to use your money for more important things, such as your regular living expenses, vacations, and other enjoyable activities.

Another important factor in military retirement is the addition of other sources of retirement funds, especially those which will be available to you later, when inflation erodes the relative value of your military retirement pension. That is why it is important to open a Roth IRA, Thrift Savings Plan, or other investments. You can open a TSP account through your military pay unit or you can check out the best IRA brokerages for good places to start your civilian retirement plan.

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Date published: March 10, 2010. Last updated: January 22, 2011.

Article by

Ryan Guina is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is currently serving in the IL Air National Guard. He also writes about money management, small business, and career topics at Cash Money Life. You can also see his profile on Google.


  1. Retired guy! says

    Liked the article. The problem with MOST active duty military and military retirees is they live beyond their means and paycheck to paycheck. Most people are spenders not savers and until they figure that they need to save for their future…they will continue their lifestyle of living for today. No amount of money can sustain a lifestyle if you spend more than you earn. $20-30k a year in reirement benefits can sustain the living expenses for a family of 6 if it is spent wisely. I know because I am reired and spend my $20-30k wisely. No debt. Thanks for the info!

  2. Dave says

    Very good info. Although it might be a little misleading to say that retirees get “full medical coverage” as though we’re not charged for it. If we want to retain our “full medical coverage”, we have to pay premiums (just like civilians). Granted, our premiums are cheaper (about $150 a month for medical and dental combined) but it’s not quite free. Believe me, when you’re talking about a $2,000 a month income, those little $150 a month chunks add up.
    A smart retiree will look at his retirement income as, say, a house payment with utilities. Now you just have to find a job to cover the rest of your expenses and you’re set.

  3. says

    Great info, but do you really want to get another full time or part time job after 20-30 years of serving your country? With the governments around the world destroying our money supply, inflation is certain. Thus your retirement is worth a lot less than what you thought.

    What if you learn to be an entrepreneur before you retire or separate? Cash flow is what you should be seeking. This is the aim of the New Rich. Cooperation with your fellow man, your brother. Entrepreneurship is also about serving just like in military service.

    Most financial planners and most people always talk about IRAs, 401ks, savings accounts, etc for your retirement. That is only one asset class, Paper. There are many others like commodities(gold,silver, oil, corn, etc) real estate and businesses. To be really diversified you need all asset classes, not just paper.

    Cashflow from all these asset classes and when you retire there is no need to work for someone else, making them rich. That is a future to my liking.

  4. says

    When you used that one couple as an example, you did not note if they were retired officers or enlisted. retired officers make that kind of money but not enlisted. My enlisted retired pay is approx. $15,600 a year. out of that comes my medical, insurance, ans surviver benifits. I have to work because my family can’t live on $800 a month.

    Why is it always someone is out to make it look like the military live like “fat cats” when that is in fact a lie. Active duty military in the enlisted ranks for the most part, use food stamps, if the live on base, in sub-standard housing and still have to pay for it. We do not live the life of Riely. Our pay is below the national average. This kind of lie reporting needs to stop and the truth needs to be told. If you are going to make this kind of report, tell both sides (Officer and enlisted) and not just one side (officers).

    • says

      Doug, the couple in question were both enlisted – the husband was a Chief Master Sergeant in the USAF (E-9, with annual pension of $36,900), and his wife was a Master Sergeant (E-7, with an annual pension of $21,600). The article discusses how they were motivated not only in their careers, but in their personal lives, by focusing on making rank, earning money, saving, investing, and learning. There is no simple way to achieve an early retirement – it comes through hard work and sacrifice.

      I was enlisted while I was in the military and was never on food stamps, nor were any of the people that I knew. The military has made many increases in pay and benefits over the last decade or so, and very few people now qualify for food stamps, partly because of pay increases, but also partly because of a program called Family Supplemental Subsistence Allowance which is used to eliminate the need for military members to receive food stamps.

      Enlisted members paying to live in substandard housing on base? I’ve never heard of this. In my experience, base housing has always been free (as in no out of pocket expenses). Some off base housing requires payment if it has been privatized, but rents are capped at local BAH levels, ensuring military members aren’t paying much, if anything, out of pocket.

      This website is devoted to helping military members and veterans improve their financial situations, not portray the military as something it isn’t. For more information, please see Do Military Members Get Paid Enough?, and our response to people who think Military Members Have it Too Good and Whine Too Much.

      • tgarner567 says


        Great reply. I have spent almost 22 years in the Army as an enlisted Soldier and I can recall only two or three military families who were on food stamps throughout my whole career. All of those families were very junior Soldiers who had unusually large families at a young age. One correction though. Base Housing has never been free because it costs members the value of their housing allowance for a given area. Members who live on post forfeit their basic housing allowance (privatized or not). In fact years ago dual military couples took a double pay cut as both members had to forfeit their housing allowance (BAQ). Now only the senior member loses the allowance when they live in government quarters.

        • says

          Thanks for the reply, tgarner. The term “free” in relation to military housing is used loosely. It’s true members are giving up their BAH, but there is no out of pocket expense. I knew many people who elected to live off base and BAH wouldn’t completely cover their housing and utilities. Perhaps a better way to word it would be “no out of pocket expenses,” which might be more accurate.

          I wasn’t aware of the changes to military couples living on base. That is a nice change!

          • tgarner567 says


            You are very welcome and thank you for your service as well. I think it just adds to the misinformation when we use the word “free” when referring to any military compensation or allowance. Everything we get in the military comes with a price that cannot always be measure using dollars and cents. Another update on the “out of pocket expenses.” There is a new program for Soldiers who live in privatized housing where they are given an allowance for their utilities every month and that allowance goes to the housing company. If they go over the allowed amount they have to pay out of pocket for the overage. Keep up the good work. its nice to see someone taking the time to dispel the rumors and set the record straight regarding the men and women, the true 1% …who serve in uniform. Thanks


  5. Eliza S says

    Why are we supporting such luxury retirement for retired military personnel? Many of these retirees have two homes (purchased with housing allowance for homes rented out during their tours of duty), two cars, beautiful furnishings, golf club memberships, lavish vacations with free (almost) housing on military bases throughout the US and abroad, standby flights to almost anywhere in the world, inexpensive health insurance, privileges at military exchanges, etc, etc. I know of no other employment that offers such luxury benefits. The money spent for these benefits could well be spent in areas that could benefit all the citizens of the US.

    • Schadenfreudian says

      @Eliza S: “…luxury retirement for retired military personnel?”

      Eliza, someone sold you the economy size of Kool Aid, and you seem to have drunken deeply from it. I’m a retiring O-4 (LCDR) and expect to clear perhaps $2K a month, with SS kicking in a few years later to take me to the uber-rich demographic of Americans making $48K a year.

      Know what, though? For the amount of crap and for the dangerous, life-threatening situations I found myself and the crew in, I and we have earned every flipping cent.

      • Tara says

        Amen! The only people that have the nerve to say something like that is the ones that sit and live in the US with all the freedom never have they went and fought for anything its just given to them. Military people are special people and should get there retirement and so much more for there service. Thank you to all our troops!

    • AD Military Member Not Living a "Luxury" Life says

      @Eliza…It’s very disturbing to hear people who havent did their research make comments about military pay and/or lifestyle. A person’s life is priceless. Military are underpaid for what they due. Im sure you, Eliza S., dont work a 24 hr shift. Guess what? If you invested yopur money wisely, u could live a “luxury” life, too. However, if you look at statistics or researched online, since you do have a computer to blog here, you would know that MOST military members dont live a “luxury” life. They live a life of not knowing where they or their family will be in the next 90 days or so. Until you get your facts and figures straight, please keep the negative comments to yourself. Thanks and continue to educate yourself on things you disagree with. Knowing is half the better 😉

    • tgarner567 says


      I am shocked and appalled. Why is it that so many Americans place so little value on the service and sacrifice that members of our Armed Forces have given this country. Many of these retirees have two homes because they were forced to move as many as 10-20 times throughout their careers and they could not sell their homes so they had no choice but to rent them out or live on beans and rice for years to pay two mortgages. Most of them have two cars because both parents had to work to support their families during extended training, deployments and separations to fulfill their duties. Housing is not free, they give up part of their pay that is equal to comparable rent in the area, for the opportunity to live on base because it is safer and more convenient. We are the true 1% who are selflessly serving our country right now. What have you done for your country that is not self serving in some way? And just how would you propose to use these funds in any way that is more beneficial that defending your freedom, constitutional rights and way of life? You have no idea of the magnitude of sacrifice, hardship and danger that our men and women face on a daily basis. So before you judge us as undeserving of such “lavish” benefits, I suggest that you spend a day walking in our shoes before you pass judgement on something that you have no capacity to understand.

    • ayicia scott says

      Did all the citizens of the u.s risk their lives for yours and go to afghanistan, iraq , and other war zones leaving their family behind for a year at a time? Didnt think so…

    • robert says

      @Eliza, I can’t believe your ignorant comment. Every year spent in the military is like 5 times your year as a civilian. by the time a service member retires his/her body is severly broken down with ailments. not to mention the years of stress/anxiety. If you think its such a great lifestyle then why don’t you take the opportunity to join. You get to sleep at night because we are on duty 24hrs a day. You are able to blog and make insane comments because of your freedoms. Thank a soldier instead of dishonoring what they deserve. YOUR WELCOME!

  6. William says

    Just found this and looks like a good source of information for our Military.
    I am a retired/disabled USAF E-7 and I was once on foodstamps because a E-4 in England was hard times.


  7. Mitzi says

    Free housing err no! It makes my blood boil when you civilians say we have free housing…we DONT!!! Military pay is broken down into segments, if you live in base housing (for the most part basic and old) you just dont get that portion of your paycheck. It is no different than any civilian job paying your rent or mortgage. If you civilians cant handle the fact that your civilian employer doesnt break down your paycheck, not give you a portion if you live in your employers quarters, then I suggest you shut up and join up!

  8. spytheweb says

    I’am retired E-6. I make under $17,000 and have lived just off that for the last 3 years. I live on a budget. I don’t have a car, cable or creditcards. I pay rent, gas & power. Everything i own i own out right. I have a LCD tv, broadband internet, computer, satellite radio and a cat. My 2 sons went off to college (NYU class of 2007) and the Air Force so i have a empty nest. I looking into moving to maybe Thailand after i file for SS. There my money will go a long ways plus the weather is nice. I now live in Las Vegas across from Nellis. I have never been to Thailand, but spent 4 years in Korea and 4 years in the Philippines and lived off base, i think i can adjust. Plus i’ll be able to save again.

  9. enrique flores says

    Good article, sounds to me that the bottom line of this article is to garner some business as a financial adviser.

    • says

      Thanks for sharing your comment, Enrique. The bottom line for this article is for military members to plan well ahead of their military retirement so they know exactly what they are getting into when they separate from military service. The goal is to be able to have the flexibility to decide on your own terms, not to be forced into a decision.

      The examples in this article prove it is possible to retire from the military without having to work again, as long as you are properly prepared to do so. This includes strong financial management such as getting out of debt, investing in IRAs and/or the Thrift Savings Plan, and living within your means.

      I know several people who were able to retire from the military and never have to work again, but the vast majority of the people I know have not been able to do so – either because they had debt when they retired, or they didn’t have enough money saved to be able to live off their pension.

      There is no right or wrong way to retire from the military – many people choose to work out of desire or necessity, and some retirees miss the responsibility of working. The blessing, however, is having the ability to make the decision without having the decision made for you.

  10. Clueless says

    So I’ll be retiring here in the next 6 yrs. Basically I’m looking on 3 choices REDUX, high 36, or the CSB? Any suggestion on type of retirement? Still confuse on these type of retirements.

    • says

      The best retirement plan for most retirees is the High 36, as it is worth tens of thousands (or possibly hundreds of thouands) of dollars more over the course of an average retirement. In most cases it is best to avoid the cash option with REDUX.

  11. christie says

    im alittle lost my soon to be husband is retirering in from the army in 2 years and and he has been in afghanistan since 2003. he has been in the army for a little over 20 years when he retires. and he says not to worry about money and we are looking for a house a farm house i have horses. the phrase dont worry about money worries me cause im looking at houses and the one we have choose is 250,000.00 and im worried we might not make a decent living. i was raised in a poor family and could you guys give me some idea about what a retired army sergeant would make after 20+ years in the army?

    • says

      Christie, military retirees get a pension, which is based on their grade and total time in service. They also receive health care benefits for themselves and their qualified dependents. Here is a link to the most recent pay chart: Jan 1, 2012. Keep in mind this is for active duty pay; retiree pay is based on a percentage of the active duty scale.

      Keep in mind your soon to be husband may also have other investments outside of his military pay, and he may be planning on working or earning income after his retirement. I recommend speaking with your fiance to find out more information about his grade, number of years served, and other information. It is essential that you have an idea of how military pay and benefits work when you are going to be married to him.

  12. Archie says

    Retired military and veterans earned every freakin cent…..0341 infantry Sergeant USMC….2x Purple Heart Recipient Medically Retired, 100% VA special mon. Comp-S, 100% DOD, SSDI Approved.

  13. Archie says

    No, thank you Ryan…I’m just trying to enjoy my family and live a peaceful life. Im trying to get into investing…real estate and my wife is trying to open up her own beauty salon.

  14. Daryl says

    I have been in the military for 27 years and have 22 for retirement and I am retiring in a few short months. I only read half of these comments and really have to chime in here. I have given up my American freedoms to live in a communist regime so all people can enjoy their American freedoms for most of my life. I have been shot at, seen friends die, jumped out of foxholes, felt the blasts of explosives going off right next to me, and been away from my family and ones I love or 6-9 months out of the year. And that was only my first 4 years in the U.S. Army getting paid $500 a month. Since I took a break for a few years still on recall status, then I went to the National guard and my first drill was the LA riots shortly after was the Northridge earthquake. Went in the U.S Coast Guard and again been gone away from my family and friends minimum 6 months out of the year doing drug interdiction, search and rescue, migrant introduction, aids to navigation, port security, ETC ETC ETC. I am in the middle of the ocean as I am typing this post. I have missed my two children growing up and spent very little time with them. I and every other member in this great military service have sacrificed our lives, family, and freedoms. We definitely did not do it for the”great Pay” We do it for this great country and the people that live in it. I read some of these posts and the author a few years in the AF. Some of these comments are a disgrace and some of these people should be ashamed of themselves. Go around the world and actually see how most other countries have it. America has had the privilege of living an awesome life for the last 70 years and if anyone has the pleasure of meeting a WWII vet shake his hand, give him a hug, and buy him a beer because it is the great sacrifices of these men and men like them why our country is one of the wealthiest and greatest countries in the world.

  15. Vince Ryder says

    Living off your military retirement? Of course it is POSSIBLE, particularly if you have a paid-off place to live, and your pension brings in over $2,500 per month. However, the vast majority of military retirees enjoy neither of these factors at a 20-year retirement. A better bet for most is to serve 24 – 30 years, which for many will be another (at least one) bump up in rank, and an additional 2.5% of their “High 36” income PER YEAR of added service. I believe less than 5% of 20-year retirees would make a living “wage” amount in their pension, but perhaps 30% would if they served another 4 years. I did 24 years total, and I’ve lived off my pension for 5 years since retirement. I’m not rich, but I’m not looking for work, either. Three HUGE factors in this calculation are: 1) how many are in your household being supported by the pension, 2) where do you live?, and 3) what lifestyle do you find acceptable?

    • says

      Vince, You make some great points! I’ve only known a few military retirees who were able to retire for good off a military pension. Most have gone back to work either because they wanted to work (some), or more likely because they had to, to be able to continue living at their current standard of living. There is nothing wrong with either of those reasons. Your three criteria are all factors people should consider before taking the leap into retirement.

  16. John Oliver says

    This article, as well as some of the positive comments, is a great relief. I’m retiring as an E-6 after twenty years, which makes me a bit nervous. However, on the bright side, I earned my college diploma, I have zero debt, I haven’t touched my GI bill, and I’ve never been a big spender (I’m cheap). I’m looking forward to retirement.

    • says

      Congrats on your retirement, John! You have a lot to be proud of. Your retirement is what you make of it. There are many people who can get by on their retirement, while others will never be able to retire because they simply spend more than they make. It sounds like you have that part of it taken care of. And if you decide to work, hopefully you won’t have to take the first thing that comes along and you can choose something meaningful that you enjoy.

      One thing about the Post-9/11 GI Bill – it covers 100% of your tuition, up to the highest in-state college. And it pays a monthly housing allowance equivalent to an E-5 with dependents. I know some people who have taken classes they enjoy, just so they can earn a little extra money each month through the housing allowance. Something to think about if there are any classes you have been thinking about taking! Thanks for your service, and best of luck in your retirement!

  17. John Manheim says

    The nice thing about military retirement pay is when you retire it’s for the remainder of one’s life. Plus the fact most enlisted folks are in their early to mid 40’s, one can start another career making the going amount. My example, I retired in 2003 at the age of 40 as a USAF (E-8) – my 2015 monthly take home military retirement pay after SBP and taxes is $2,637 plus I get $1,227 per month in VA disability (tax free) for a total of $3,864 per month. My post civilian career has blossomed, and I’m making over $65,000 per year. So, I’m effectively making over $111,000 per year. The military paid for Bachelors’ degrees for me and my wife. She makes about $75,000 per year – so our family income is over $186,000 per year – not bad and better than many officers. Many of them retired too old to start productive careers, or they just couldn’t adapt to the civilian work force. Plus officer’s wife’s had to stay home and be part of the officer’s wife’s club and doing volunteer work. All the while my wife finished her 4-year accounting degree, and is now an accounting department manager making over $75K. My example doesn’t even mention medical, BX, Commissary, and other benefits. Also, can’t forget my 10 percent Lowes and many other military discounts. I think we could retire now, but without as many toys. Moreover, we have accumulated over $400K in our 401K’s from our current jobs. We should have around $600-700K or more in our 401K by the time we eventually do retire. I’m thinking we should live a very good retirement!!! Enlisted is definitely the way to go – Aim High folks!!!

    • Runner says

      Hi im 22 year old male and im currently studying furiously for ASVAB so i can enlist in Air Force. Im korean-american, single (i dont plan on marrying), very frugal (i plan on saving 90% of check and spend rest on necessities). I currently have no debts, no children, and i have a desire to serve 20 years so i can retire and buy a simple house in washington. I just want to know if it is possible to serve 20 years in AF since i heard military life has its difficulties? Ty in advance

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