When to retire from the military, and how to decide

[oneinhim]

For those that have retired from the military. How did you decide when it was time? How did you plan the next chapter of your life? I have no idea where to start.

Obviously, if you stay a few years beyond 20, the pension is significantly larger. But you are also older, and delaying any plans to pursue educational and a second career goals. Do I want to start a second career in my 50's?

Is it realistic for a E-7/8 or W-2 to just retire and never have to work again? Or does everyone end up with a second career?

 

[djpearson]

@oneinhim I retired because I didn't make e7. I'm at 80% disability and my full income is just under $4000. 2022 is the first year that military retirement pay is 100% tax free at Indiana state level.

I don't have to work but I choose to so as to avoid boredom.

 

[mellanna]

@oneinhim Really depends on an individuals situation . I’m in the same position, kinda want a new job, over 20 years TIS, do I really want a another 2 years after accepting a promotion.

I have been tracking absolute needed money totals (food on table, bills paid) and monthly spending (includes fun money) for about 18 months now. B/T pension, wife’s pay, and dividends I can easily cover the absolute money. But I’m still a bit short on monthly spending. Don’t want to rely on disability due to the subjective nature of evaluators.

 

[ericthesinner]

@mellanna Tips for getting disability up there?

 

[mellanna]

@ericthesinner Sure wish I knew. Would take a big variable out of the equation.

I have talked to other guys and heard success and horror stories. The common denominator was who ever verifies your claims for their ratings.

 

[djpearson]

@mellanna check out r/VeteranBenefits's Knowledge Base.

 

[djpearson]

@ericthesinner check out the Knowledge Base on r/VeteranBenefits

 

[bubblegum2021]

@ericthesinner If you suffer from heart burn, medically known as gastroesophageal reflux disease or GERD.

Claim that shit!

I told them I puked blood once from heart burn and was rated at 60% for that alone. There’s so many things to claim that you’d never even consider.

 

[resjudicata]

@oneinhim Probably not realistic to never have to work again if you don't live in a cheap area, unless you get 100% from the VA. An E-7 at 20 will be around ~$2700/mo, which may or may not be taxed depending on which state you live in.

 

[gabechosen15]

@resjudicata

which may or may not be taxed depending on which state you live in

I think I see what you're saying, but to clarify Uncle Sam will get his taxes either way, but the state may/may not take a state income tax.

 

[the3dwoman]

@gabechosen15 I believe South Carolina and Oregon are two states that do not tax military retirement income.

 

[callen3822]

@the3dwoman Oregon taxes it. They only don't tax the percentage of retirement earned prior to 1992 (or somewhere around there).

 

[the3dwoman]

@callen3822 Guess I’m not retiring there.

 

[djpearson]

@the3dwoman Indiana doesn't either, as of this year.

 

[joyshuffle]

@the3dwoman Lots of states don't tax military pension and list is growing. AZ is new. VA now has at least a partial.

https://turbotax.intuit.com/tax-tips/military/states-that-dont-tax-military-retirement/L6oKaePdA

 

[keai95]

@gabechosen15 You can add Arizona to the doesn’t tax military retirement pay column.

 

[meaningfulchristianity]

@oneinhim Might be asking a dumb question but have you planned for retirement at end of service? I guess what I'm saying is that the pension by itself won't be enough (think people were saying about $2700/mo, not counting any disability which you'll likely get) but that's a hell of place to start.

Now factor in that you are coming off a 20 year career... Have you paid your house off? Invested in real estate (bought homes at each duty station and rented when you left)? Invested in the market (Brokerage to bridge to 59.5, TSP/IRA for retirement age)? If you have kids, did you transfer your GI bill to avoid one huge lifetime expense?

Guess I'm saying you are the only one who can say if that $2700/mo plus whatever disability is is enough. I'm currently a 12 year E6 with a definite goal to be in your proposed situation, want to be able to say all of my time at the end of service is my time. If I work, it will essentially be to provide structure to my week and provide recreational money I hadn't planned for. But that all starts with realizing what the goal is early and work towards it. So really depends on if you've put that work in over the years and what kind of life you are looking for during retirement.

 

[dasiebe01]

@oneinhim The pension doesn’t get substantially larger for the time you put in past 40. Just calculate that out with a spreadsheet. I got a job and now make about 100k more than I did when I was active duty; compare that to working a few more years! I guess it depends on what you want to do and your skills, but if you are enlisted, your income will probably skyrocket after retirement if you choose to work for the DoD. Wish I retired sooner but I thought I’d make more by increasing my pension. Lol. Nope. Also, I now work less and have way less stress, and am doing the same work so I feel like I’m still in for the good parts of it anyway. Now that we worked for a few years making so much bank, we will permanently retire for good here very soon. Being able to make that decision is really more affected by how you’ve chosen to live your life the last 20 years. If you are only now asking the question on if you can permanently retire, you might be very far from that goal.

 

[ryannate]

@oneinhim Everyday past twenty is working for half pay.

 

[riser]

@ryannate This isn’t exactly correct. It is correct regarding your salary, but you aren’t considering the increase in your retirement annuity that increases at 2.5% a year and will pay you for the rest of your life. Throw in a promotion or 2 and it makes a big difference. I was on the O side and really considered punching at 22 yrs. I ended up staying another 6 yrs and promoted one more time and increased my retirement amount by >50%. Had I jumped into a post military retirement gig after 22 yrs and started pumping money into a 401K, there’s no way I could have increased my lifetime retirement annuity as much as it increased by staying in another 6 yrs.