Planning ahead

[rlpridgen]

After doing a lot of research lately on different plans for retirement, I’m stumbling on finding solid information. Unfortunately I am looking to end my active duty career and spend the rest of the 20 years or so in the reserves. I enlisted for 4 years(which would put me at 9 years). Is it worth me staying an E-4 for another year and collecting the ISP and having to pay it back? Or should I just transition to reserve at my 9 year mark? Looking at this from a retirement standpoint. Any advice or tips is appreciated. Thank you!

 

[christiscoming]

@rlpridgen You might want to check out Doug Nordstrom, the author of “The Military Guide to Financial Independence “. He retired at 20 years from the Navy but states that he wishes he had transitioned to the Reserves rather than 'gutting out' the last few years. Interesting life story and solid advice. You can find interviews with him on a number of podcasts. Good luck!

 

[girl4god86]

@christiscoming Also, his wife did about 16-18 years active duty and then transitioned to the reserves for quite a few years to earn her pension. So he’s seen both sides. He is a great resource.

 

[anonymouseses]

@girl4god86 Thanks for the kind words, @girl4god86!

Also, his wife did about 16-18 years active duty and then transitioned to the reserves for quite a few years to earn her pension.

Yep. 17 years, 11 months, and 10 days... followed by 7.5 years of Reserve drills and some ATs.

Her experience not only greatly improved our quality of life, but also demonstrated to both of us that I should've left my active-duty career for the Reserves at about the 10-12 year point.

 

[anonymouseses]

@christiscoming Thanks, @christiscoming!

People should be able to find a free copy (print & eBook) at your military base library or local public library.

 

[modesty]

@rlpridgen You can retire from the Reserves but it will take longer. Reserve servicemembers who complete a minimum of 20 "qualifying" years of service (creditable retirement years) become eligible for retired pay at age 60.

There’s also a point system where 7,300 points are required for retirement. After 9 years of active duty you’ll have about 3,300 points, but in the reserves you would earn points different:

• 15 points for each year of membership in a Reserve Component (Guard and Reserve).
• One point for each unit training assembly.
• One point for each day in which a member is in a funeral honors duty status.
• Satisfactory completion of accredited correspondence courses at one point for each three credit hours earned.

If you’re mobilized you’ll earn one point for each day of active service, you can also begin drawing retirement benefits before age 60 if you deploy for war or national emergency. For every 90 consecutive days spent mobilized, you will see your start date for annuities reduced by three months.

 

[1mpdmpd]

@modesty How would someone ever reach retirement with this system? 7300 needed to retire and you only get 15 per year for being in. Idk how often the NG/ Reserves do training, but let's say 100 ( just to help the system). Then say 15 days of funeral detail. That's 130 points a year. You would never reach the points.

 

[modesty]

@1mpdmpd

A “normal” year in the Guard or Reserves should be worth approximately 78 Retirement Points. This is broken down as: 15 Points – Annual Participation. 48 Points – 12 Monthly Drills (4 Drill Periods per month)

It’s rare for any of them to ever do funeral details.

Each year counts as a “qualifying” year, as long as they have 20 they can start withdrawing retirement at the age of 60.

 

[emm1]

@modesty This is incorrect. 7300 is the number of points you have after 20 years of active duty. All retirement types are point based. It just doesn't really matter or get talked about for the active duty side.

 

[fatpvt]

@modesty This is partially misleading, the points is what your retirement compensation is based on (plus rank) but regardless of AD or Reserve/Guard you need 20 years. The reserves/guard retirement is just not able to be drawn on until 60 (minus any reduction in time based on mobilizations/deployments) whereas the AD begins upon separation.

 

[tewingveale]

@rlpridgen @anonymouseses

 

[anonymouseses]

@tewingveale Thanks for the tag, @tewingveale!

 

[anonymouseses]

@rlpridgen If you’re still feeling challenged & fulfilled, @rlpridgen, then the Reserves and Guard have a lot of the good parts of the military without so much of the sucky parts. Better yet, you'll have another shot at work/life balance with a much higher quality of life.

I’d start talking with a recruiter now to understand your options. Depending on your skills & qualifications, I’d consider any of the Reserves and the National Guard. Reserve units aren’t always close to wherever you’re living after active duty, and there’s a lot more Guard armories scattered across the nation.

Whatever you decide, make sure you also fully document your VA disability claim while you’re leaving active duty. There are plenty of Reserve & Guard members with 30% VA disability ratings, and even some with 100% ratings.

These two posts discuss what you’ve already figured out, and the second one is a deep dive into the details of the Reserve pension. It keeps up with the Employer Cost Index between the time you stop drilling and start your pension, and it keeps up with inflation (the same as Social Security) during the years you’re receiving your pension.

https://themilitarywallet.com/leave-active-duty-for-reserves/

https://themilitarywallet.com/reserve-retirement-calculator/