Is Military Retirement Pay Enough to Retire On?

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Military retirees have one of the best pension plans in the US. After only 20 years of service, military retirees can retire under the High-3 retirement plan 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. Members who…

Military retirees have one of the best pension plans in the US. After only 20 years of service, military retirees can retire under the High-3 retirement plan 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. Members who retire under the new Blended Retirement System will earn 40% of their base pay, in addition to whatever they stashed away in their Thrift Savings Plan.

Members who retire from the Guard or Reserves can also earn military retirement benefits, based on a point system. These benefits start at age 60, which is close to the traditional retirement age of 65.

It is not a stretch to say that 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 Pay?

The short answer is, yes, absolutely.

But it takes a lot of planning to make this work.

A good friend of mine, Doug Nordman, wrote the book, The Military Guide to Financial Independence and Early Retirement, and founded the website, The Military Guide.

In his book and website, Doug discusses the steps he took to achieve financial independence – the point where he would no longer need to actively work to sustain his lifestyle. He and his wife saved and invested over the course of their careers, and even made dozens of mistakes along the way. But by saving a high percentage of their income and living well within their means, they were able to reach the point where they could maintain a nice quality of life (in Hawaii, no less!) while living off the income from his military pension and their investments.

His story is inspirational and well worth reading. I highly recommend the book or starting with the About Page on The Military Guide. His book had a big impact on me and was one of the factors that lead to my joining the Air National Guard after being out of the military for over 8 years. Being able to earn military retirement benefits will have a huge impact on my financial future.

Another Case Study – Living Off Enlisted Military Retirement Pay

Here is another example, this time of 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 any more 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. The CNN Money article discusses how their retirement pay currently covers their fixed costs including their mortgage and other regular bills. But it doesn’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 a while 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 (indexed for inflation) 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!

This is also something that is worth repeating. Your military pension is extremely valuable because it gives you the opportunity to decide which type of work you want to do. Having that regular monthly cash flow should reduce the amount of money you need to earn in the future, making it easier to take on the type of job you want to do, instead of being tied to taking the highest paying job. So use this as an opportunity to take a job in a field that is rewarding.

Can Everyone Live off Military Retirement Pay?

While many people have figured out how to make it by on military retirement pay, it’s not something that everyone can do, at least right away.

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.

It does take a lot of planning and it requires the retiree to avoid taking on too much debt or too many ongoing financial obligations.

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

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 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. 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 start your civilian retirement plan through a civilian 401k program or at an investment firm.

Finally, don’t forget about Social Security Benefits, which will be available to you in your 60’s. Full retirement age is 66, but you can begin receiving a reduced amount at age 62, or you can wait beyond age 66 and receive a larger payout. And depending on when you served, your military service may impact your Social Security Benefits in a positive way. So that is something else to look forward to.

With careful planning, you should be able to get to the point where your military retirement pay and other benefits will be enough to pay for your retirement. It may not happen the day you leave the military. But with careful planning, you should be able to reach that point, especially when you are able to begin taking withdrawals from retirement accounts and when you begin receiving Social Security Benefits.

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About Ryan Guina

Ryan Guina is the founder and editor of The Military Wallet. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes,, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

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  1. Grim says

    Can anyone assist?

    Half ACTIVE / Half RESERVE – Retirement Pay.

    I spent 10 years active duty USAF (1996-2006).
    I’m currently in the USN Reserve (2016-present).

    When I retire (2026) I’ll have 10 years ACTIVE and 10 years RESERVE as an E-7, over 20 years.

    What’s the ballpark estimate for monthly retirement?

    A financial adviser in the USN Reserve told me it would be half of what ACTIVE/E-7/Over 20 makes ($4,797), which would be $2,398.

    Thank you fellow service members for your sacrifice and dedication to the nation.

    • Theodore Robb says

      How did your Financial Adviser come up with these estimates($2,398.00) under the High-36 military retirement system. I’m several months away from a Final Pay military retirement which ended 8 September 1980. I joined the Navy 27 August 1978. I have 4007 points similar active duty time an also similar reserve time (21years 11months 11days).

  2. Les Waller says

    I retired as an E-6 in 2000 and my “retainers fee” still hasn’t quite reached $20k/year in 2019. We used the money to ensure we could make house payments with it and it was good insurance if I had to be between jobs at any point.
    I got a full-time job after retirement in the IT industry and it pays well; however, after 19 years of doing it, I’m tired of working in an air-conditioned office year round with no windows.
    I’ve decided to build my own online business at home because I don’t think I can take another 5 years of this before being able to receive social security, which will also be inadequate.

  3. Usn-Usar says

    As an always single, long retired E-7 with 22 years, during my first two years I was jammed into old barracks with one commonly non-working coin-op washing machine and drier for the entire 4 wings of about 100 men while marrieds each had a house in the new housing development with new appliances, time off to take the wife, kids or pets to the doc and an exemption from holiday weekend duty because they needed to be home with their families.
    Civilians were perhaps 30 miles away, but there was no public transportation and most junior enlisted couldn’t afford a vehicle. (A later sociology course listed lower enlisted personnel and prison inmates as equivalents, but that was before they abolished the draft.) Once upon a time people were barefoot, lived in caves and without the IRS.
    Married personnel must cost the military at least twice the cost of singles when all active and retirement benefits are included, but apparently married and their extended families created more noise and more votes, and the senior personnel who did the lobbying probably had actively lobbying spouses.
    Meanwhile, the best supervisor I ever worked for/with, military or civilian, “Blackie”, was 2 weeks out of boot camp, freshly arrived in Pearl Harbor when it was bombed, advanced to the top enlisted rank, then E-7, the top Warrant rank, accepted the rank of Lt.jg., and was an O-4 when I worked for him.
    A farm kid who’d never worked a 40-hour job or seen a timeclock, I only knew to work when there was work to be done, and Blackie kept me busy with responsibilities demanding that I master unexpected challenges and preparing me to replace my seniors, but the first two years left a bitter taste that drove me out until some years later when I discovered that I could get paid for that time if I joined the reserves and qualified for the pension and long promised medical benefits that were later largely defaulted upon.
    The experience of a serviceperson isn’t that of a dependent, but hopefully all of us have chanced to meet and appreciate some memorable people and can be thankful.

    • CPOUSNRET says

      Yep, you got it, it’s a hard and unfair first few years as a single Service person. Married personnel of the same pay grade had many undeserved added privileges like a house or duplex to themselves snd their spouse. Another thing about earning a Service “retirement” is YOU ARE NOT RETIRED AT 20 years. 20 years Active, 10 year non-drilling, but recallable reserves. It takes a combination of Active & recallable reserves totaling 30 years. Best check with federal law for all services to be sure you’ll get anything for 10 active, 10 reserves.

  4. Hastings Lamb says

    To those who think military retiree pay is a luxury, they have no idea what it takes to earn such. I suggest they walk a mile in any military retirees active duty shoes before complaining. Perhaps in the next war by taking point on a LRP or flying as a gunner in a helicopter, or performing maintenance on an ICBM in -40 temps, or performin guard duty on a flightline on a northern tier base in a blizzard, etc., etc.

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