Retirement Planning: What do Military Families Need to Know?

As a financial planning firm based in New Bern, NC, we have the incredible opportunity to serve those who have served our country. Craven County is full of retired military, particularly Marines, and we're always thrilled to help them transition to civilian life from a financial planning standpoint. 

Retirement is an exciting life milestone that requires careful planning and budgeting. For military families, it requires even more knowledge because you must ensure that you meet all the military's qualifications and take full advantage of any veterans benefits coming your way.

With Veterans Day a week away, let's look at what military families need to know when approaching retirement planning, including how to make the most of your benefits and live a comfortable civilian life.

Transition Assistance Program

The first thing to know when retiring from the military is that you will likely need to go through the Transition Assistance Program or TAP. TAP is a program that provides information, tools, and training to make your retirement as seamless as possible. Some of these training resources are optional, but some are mandatory before leaving the military.¹

In the mandatory requirements, you may need to:

• Complete an individualized initial counseling session
• Complete the pre-separation counseling brief
• Attend a mandatory briefing on transition preparation and your benefits
• Have a final medical exam
• Schedule your final move¹

These requirements may be based on your circumstances, and each branch of the military has specific information. Check out the TAP website to find out everything you need to know.¹

Marines will complete the Transition Readiness Program (TRP). The TRP does a good job of providing Marines with practical tools to transition to civilian life from an employment and educational standpoint. However, we find that retired Marines we work with are looking for much more in-depth financial planning-related support such as budgeting, investing, tax planning, and income planning.

Post-Retirement Income

The most important part of retirement planning for anyone, including veterans and their families, is income planning. The goal of retirement-income planning is to not only have enough money to last through your retirement years, but to enjoy it as well. To do this, you must understand your income sources and establish a budget accordingly.

There are a few different retirement pay options for military members and their families.

For service members with an entry date before September 8, 1980, you will receive a final basic pay. This defined benefit equals "2.5% times the number of years of service times the member's final basic pay on the day of retirement."²

For service members with an entry date between September 8, 1980, and July 31, 1986, you will receive "High 36," which is a "defined benefit that equals 2.5% times the number of years of service times the average of the member's highest 36 months of basic pay." This retirement pay is also applicable to service members with entry dates after August 1, 1986, and before January 1, 2018, who did not choose REDUX or opt into the Blended Retirement System.²

Lastly, the military offers the Blended Retirement System. The BRS covers more than half a million service members. This system combines elements of the legacy retirement system with benefits similar to those offered in many civilian 401(k) plans.²

As you build your post-retirement budget, you must know how much money you will earn in retirement. In addition to the plans listed above, military families should consider taxes, annual adjustments, civilian employment earnings, investment returns, and Social Security benefits. (And be sure not to forget one of the most overlooked aspects of retirement planning: mental and physical wellness - see what Rob and Jay have to say on the subject here) 

Insurance Planning

Medical expenses are a huge consideration in retirement. As a veteran, you can access insurance plans for yourself and your family.

The main one is TRICARE, but you must enroll yourself and eligible family members, so you don't lose these benefits. The TRICARE website has a lot of good information, including how to enroll and your health plan options. You must enroll in a TRICARE plan within 90 days of retirement.³

In addition to TRICARE, you may need to enroll in dental and vision insurance. You can do this through the Federal Employee Dental and Vision Insurance Program (FEDVIP). FEDVIP is a voluntary program that allows you to choose from among twelve dental carriers and five vision carriers. How much you pay for these programs depends on your choice.³

As we celebrate National Veteran and Military Families Month and recognize all our military members' hard work and sacrifice, we want to share as much information as possible so you can retire effortlessly.

Retirement from your military career can bring lots of exciting and anxiety-ridden emotions. Enjoy less stress and a smoother process by partnering with us during this transition. We are here to help. Connect with us online, give us a call at (252) 635-6666, or stop by the office in historic downtown New Bern, NC, to learn more.

Thank you to all those who have served our country; we will not forget your sacrifices!