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Tabular array of Contents

1. How to Qualify for Retirement from the Guard or Reserves
2. The Importance of Reaching Age 60
3. Earning Retirement Points
4. Military Retirement Pension Programme Types
5. Military Pensions are from Your Base Pay Only
6. Computing a National Guard or Reserve Pension
7. Your Guard and Reserve Pay Base of operations Continues to Grow After Retirement
1. Retired Awaiting Pay:
2. Resigning from the Guard or Reserves:
8. COLA Adjustments
9. Guard and Reserve Health Intendance in Retirement
1. Retiree health intendance options – under age 60
2. Retiree health care options – age threescore-65
3. Retiree wellness care options – age 65+
4. Which wellness care plan is the all-time?
5. Dental insurance options:
10. Other Retirement Benefits
11. Benefits for Spouses & Dependents

Today's article and podcast both cover National Guard and Reserve retirement benefits. Retiring from the Guard or Reserves has some similarities to an active duty retirement, simply there are some very important differences, including when you will receive your military pension, how much you will receive, when yous volition receive health care coverage under TRICARE, and a few other of import differences.

The podcast and this guide both feature first-class data for current members of the National Guard or Reserves, Gray Surface area Retirees (members of the Guard or Reserves who have reached retirement, but oasis't reached age 60), and active duty servicemembers who aren't certain if they will remain on active duty through a full retirement. Military retirements tin can be complicated, so you might even acquire something if you already a retired Reservist or Guard member!

Note: If you haven't considered joining the Baby-sit or Reserves, we have a previous podcast that discusses Joining the Guard or Reserves. In that location is a lot of great information in both that podcast and article and this podcast and commodity.

In our interview, and in this guide, you will learn more almost:

• How to authorize for retirement from the Guard or Reserves
• Why age threescore is an important birthday for Baby-sit and Reserve retirees
• Earning Retirement Points
• Military retirement alimony plans – 3 Types
• How to calculate a Guard or Reserve pension
• How your Guard or Reserve pay base tin can grow, even after you retire
• The ability of Cost of Living Adjustments (this is much more valuable than you think!)
• Wellness intendance options through TRICARE
• Base of operations access, shopping, & activities
• and other valuable retirement benefits.

Featured Invitee – Doug Nordman

Our guest for this episode is Doug Nordman, war machine retiree and author ofThe Military Guide to Fiscal Independence and Retirement. This book had a big affect on me and helped push me toward joining the Air National Baby-sit after an 8-twelvemonth pause in service. Doug also runs a blog chosen The Military Guide where he writes near a variety of topics related to military benefits, veterans topics, retirement, and personal finance.

Doug retired from active duty, simply his wife retired from the Reserves, giving Doug a good overview of how retirement works from both active duty, and the Guard and Reserves. He offers tips on how to maximize those benefits.

About this guide: The following article covers many of the facts in the podcast, just due to space constraints, leaves out some of the personal anecdotes, specific examples, and additional information. I recommend listening to the podcast if you lot take the time, and bookmarking this as a resources for future reference.

Military Guide to Financial Independence

This book provides servicemembers, veterans, and their families with a critical roadmap for condign financially independent. Topics include:

• Military alimony
• TSP
• Tricare Wellness System
• More

How to Qualify for Retirement from the Guard or Reserves

In full general, y'all need to serve 20 years to be eligible for military retirement benefits. This is truthful for those who serve on active duty, or in the National Guard or Reserves. Members of the Guard and Reserves need 20 "Good" years, or "Satisfactory" years to qualify for military retirement. A Good Year is divers as earning 50 or more points in a yr. We volition cover earning points in just a moment.

Exceptions to the xx-year dominion: There are some situations when you may be eligible to retire a little early. One case is the Temporary Early Retirement Say-so, or TERA, which is often used during periods of Force Shaping and Reductions in Force (RIF). Under TERA, some servicemembers are eligible to retire with every bit few as 15 years of agile duty service. However, they likewise receive a smaller pension, both based on years served, and because there is a multiplier used that decreases the final pension calculation. Other exceptions for early retirement can be made for medical reasons, or under another limitations. But in general, we are working with the supposition that information technology takes 20 or more years of service to be eligible for military retirement.

The Importance of Reaching Age sixty

Turning lx is an important altogether for Guard and Reserve retirees. This is the age when Reserve Component retirees become eligible for all war machine retirement benefits, including pay and health intendance. Prior to age 60, retired Baby-sit and Reserve members are but eligible for certain retirement benefits, including base admission, shopping at the Commissary and Exchanges, and certain other benefits. These retirees are often referred to as "Gray Area" Retirees. You will hear this term often.

Here are some important age-based notes for National Guard and Reserve retirees:

• Gray Area Retirees – Under Age 60. Retired members of the Guard or Reserves who are not however eligible for full armed forces retirement benefits, nigh notably the alimony and health care benefits.
• Full retirement benefits – Age 60+. One time you reach age 60, you are eligible for all retirement benefits. This includes armed services pension and health intendance benefits.
• Early Guard or Reserve Retirement Pay. Some members of the Guard or Reserves are eligible to receive their retirement pay earlier than age sixty. However, they still have to look until age 60 to begin receiving wellness intendance benefits through TRICARE Prime number (see below for more data most health care in retirement).
• Early Retirement Eligibility. Early on retirement pay can be earned by serving at least xc days on active duty during a fiscal yr after January 28, 2008. You tin receive your retirement pay 90 days early for each qualifying 90-day activation (but no before than age 55). Hither is an commodity that explains early retirement benefits in more particular.

Earning Retirement Points

As mentioned in the previous section, members of the Reserve Component need 50 Points in a year to earn a Good Year toward retirement.

Members of the Guard and Reserves earn xv participation points each year and they earn points for serving: 1 Signal per Drill Catamenia, and 1 Point for each day on active duty. Each Drill Weekend actually has four Drill Periods. Guard and Reserve members have a morning drill, and an afternoon drill, each 4 hours long. So a typical Drill Weekend is worth 4 Points toward retirement.

Points tin also be earned through AT days (two weeks required almanac training), existence called to active duty for preparation, being mobilized, deploying, serving in the Award Baby-sit for military funerals, and past completing correspondence courses. Non all activities that earn Retirement Points as well earn pay at the time yous earn the points. For example, completing correspondence courses might be required to progress in your career and they earn you points toward retirement, only you may or may not exist paid for completing the course. However, doing so is in the best interest of your career.

In whatsoever given year, a member of the Guard or Reserves can expect to earn effectually 75 points or more than, depending on Drill participation, annual training participation, whether you were activated, and other factors. While at that place is no such affair as a "normal year" in the Baby-sit or Reserves, a "base of operations" yr might look something like this:

• xv Points – Annual Participation
• 48 Points – 12 Monthly Drills (iv Drill Periods per month)
• 15 Points – Almanac Training (this can vary based on your unit)
• Additional Points as earned (grooming, correspondence courses, Award Guard, mobilizations, etc.).

All your points are maintained by your parent service and piece of work toward calculating your retirement pension. We will cover this in a moment. Starting time, allow's look at how types of military pension plans and other factors used in your retirement calculations.

Military Retirement Pension Plan Types

National Baby-sit and Reserve retirement pay are almost always referred to as "Reserve Retirement Pay" regardless of whether you served in the Guard or Reserves. It is also sometimes referred to as "Not-Regular Retirement Pay. That said, the Reserves use the aforementioned retirement plans as active duty servicemembers. The only difference is how the pay is computed. Let's look through the dissimilar types of retirement plans, and then discuss how to calculate a Guard or Reserve pension.

There are three Main Types of War machine Retirement Pay Plans:

• Final Pay / High Pay – for servicemembers who entered the military before Sep. 8, 1980. Final Pay uses your concluding pay grade to calculate your retirement pension.
• Loftier 3 – for servicemembers who entered the armed forces after Sep. 8, 1980. High 3 pay takes the average of your highest three years of base pay.
• REDUX – an constituent retirement option for servicemembers who entered the military after Sep. viii, 1980. REDUX offers servicemembers a $30,000 Career Status Bonus at twelvemonth 15, in exchange for a lower retirement multiple and lower COLA.

We focus almost exclusively on the High 3 Retirement Program in the podcast because nearly electric current servicemembers and contempo retirees are eligible for this plan. REDUX is not discussed other than to say non to take it (REDUX is almost never a expert idea).

Armed services Pensions are from Your Base of operations Pay Only

Military pensions are calculated merely from your base of operations pay. This is of import to know, because military paychecks often include benefits such equally BAH and BAS, and may include other incentive or bonus pay such equally flying pay, sea pay, danger pay, or other special duty pays or benefits.

This can cause some sticker stupor for many agile duty members when they first enter retirement because their pension checks are oft much smaller than they anticipated. The sticker shock may non be as large for members of the Baby-sit or Reserves, because they are used to seeing Drill Paychecks, which don't usually include these other benefits at the full monthly rate, and it can often be years, or even decades earlier the members begin receiving their alimony payments.

Calculating a National Guard or Reserve Pension

Baby-sit and Reserve pensions are calculated slightly differently than active duty pensions. Active duty pensions are calculated by multiplying the total years of service by a multiplier of 2.5% (High-3 plan). And then you multiply that by your pay base. In the High-three pension plan, your pay base of operations is the boilerplate of your highest 3 years of pay (rough rule of pollex – that will equal about 95% of your final pay).

Guard and Reserve pensions are calculated in a similar manner, but in that location is an intermediate footstep that must be completed before y'all tin calculate the final alimony. We must first convert Points into years served. To do this, add up all your Points, then divide by 360. This gives y'all the full number of years served (the armed forces calculates a month as 30 days to make the math easy; so each twelvemonth served is 12 months at 30 days each, for a full of 360 days).

And then take your total number of days served, and dissever by 360, then multiply that by two.five%. Here is a quick instance: Say y'all have three,150 points. Divide that past 360, and so multiply by two.5%. Yous get (3,150/360) * 2.5% = 21.875%. Now multiply that by your pay base of operations (average of your loftier 3 years of bacon).

Get a More than Precise Guess of Your Alimony: Every service has an online retirement calculator that allows y'all to put in very granular information, including your Date of Initial Entry Into Military Service (DIEMS), your estimated retirement date, and other factors. Information technology's of import to annotation that these calculators are ofttimes countersign protected and you need to login to your co-operative website become this data.

• DFAS has a generic retirement calculator.

Your Baby-sit and Reserve Pay Base Continues to Grow After Retirement

There is a lilliputian-known fact nigh National Baby-sit and Reserve retirement pay. Depending on how you retire from the Baby-sit or Reserves, yous can continue earning fourth dimension in class and longevity toward retirement. That means the value of your retirement can keep pace with military machine pay raises and aggrandizement while you expect retirement pay. Just only if you choose to retire under the right classification.

Congress gives yous the pick of retiring pending pay or resigning from the war machine.

Retired Awaiting Pay:

Retiring Awaiting Pay is the improve option from a financial perspective, but it comes with a (slight) risk. Technically, you are still eligible to exist recalled to agile duty in the even of a total mobilization. Still, information technology would have a full mobilization of the entire armed services for you to be recalled from retirement. This is extremely rare and didn't fifty-fifty happen post-9/11.

Hither is the payoff – while you are retired awaiting pay, your clock is still running on your longevity and time in service. So if you retire pending pay as an E-7 at 20 years, your clock keeps running to the maximum for that rank, which is 26 years of service. So you get pay increases for six more years in service, just for being on call. To peak information technology off, y'all will receive the pay scale in effect when you plow 60, not the pay scale when y'all retire. And then your pay has the potential to increment substantially while you await to plough age 60.

Resigning from the Baby-sit or Reserves:

This has no risk of existence recalled, however, resigning from the military machine will lock in your retirement bank check with the years of service and the pay calibration in result the twelvemonth you retired. This can accept a hugely negative impact on your pension, specially if you have a couple of decades to wait earlier turning age 60!

Retired Awaiting Pay is the Fashion to Go! Retired members of the Reserve Corps oasis't been involuntarily recalled to active duty since WWII. Yes, it is possible to be recalled, but the odds are very small-scale. And the fiscal gains can be huge.

COLA Adjustments

Your military pension is indexed for inflation through annual Cost of Living Adjustments (COLA). Military pensions are tied to an annual COLA based on the Consumer Cost Index, or the average cost of inflation over a variety of consumer appurtenances. This varies from year to twelvemonth. In some years there is no COLA increase to retirement pay, and in other years it could 1%, 2%, or fifty-fifty higher.

Many people underestimate the value of these pay raises. While 1% or two% seems like a pocket-sized pay increase, these are cumulative, and they add upward quickly. For example, Doug shared that his military pension has increased past 27% over the concluding 12 years, but from COLA increases. 27% is huge!

It's important to empathise that while your pension will increase over time, information technology should be plenty to roughly keep pace with inflation. So while the dollar corporeality is a lot larger, the purchasing power should be similar as when you retired. However, this is an incredibly powerful benefit, because most civilian pensions plans aren't indexed to aggrandizement.

Guard and Reserve Health Care in Retirement

Members of the Guard and Reserves have different health care options than agile duty servicemembers and active duty retirees. While still serving in the National Baby-sit and Reserves, members are eligible for TRICARE Reserve Select (TRS), which is a premium-based health insurance program. Its cost is very affordable, coming in at roughly $l/mo for a member, or around $205/mo for a family programme. However, you lose TRS eligibility when y'all retire or otherwise exit the Guard or Reserves.

Your healthcare options in retirement depend upon your historic period (Gray Area Retirees are not eligible for TRICARE Prime or Standard), where you alive, and other factors. Here are the basics (and nosotros accept a full-length article listed at the end of this department which gives much more information).

Retiree wellness care options – under age sixty

Gray Area Retirees are eligible for TRICARE Retired Reserve (TRR), which is like to TRICARE Reserve Select, without whatsoever subsidies. The retiree must pay 100% of the premiums if they wish to participate in the program. TRR premiums are roughly $361/mo for the private and about $961/mo for a family programme. Other healthcare options include employer-sponsored health intendance plans, or an individual wellness care plan, such every bit those you might find on the health insurance exchanges. eHealthInsurance.com has a lot of great options.

Retiree health care options – age 60-65

Guard and Reserve retirees become eligible for TRICARE Prime number at age sixty. This is the same wellness insurance plan open to active duty armed services members and retirees. Withal, retirees are but eligible for TRICARE Prime number if they live within a sure distance of a military installation or regional health care center. If the retiree lives out of the area, they would only be eligible to receive TRICARE Standard.

Retiree wellness care options – age 65+

At age 65, Reserve Corps retirees are eligible to receive TRICARE for Life, which is a Medicare Supplemental Insurance Program. There are no monthly premiums for this program.

Which wellness care plan is the best?

This is where it's a good idea to listen to the podcast episode. Doug goes into each of these plans in more detail and explains the associated pros and cons of each plan. Additionally, you can contact a TRICARE Ombudsman who can assist you make up one's mind which plan is best for your situation. There should exist one at each Military Treatment Facility, or you tin contact TRICARE, and they will have someone explain things to you and help you choose. Finally, nosotros have full-length articles discussing health intendance options after leaving the military and Retired Guard and Reserve health intendance options.

Dental insurance options:

Until age 60, retired Guard and Reserve members must provide their own dental coverage. They can practise this through their civilian employer, by purchasing a private insurance plan, or by self-insuring for dental care. Members become eligible for military retiree dental coverage at age 60.

Additional Health Intendance Info Covered in the Podcast:

• Healthcare for dependents
• What if you don't live near a Military Health Care Facility?

Other Retirement Benefits

Doug and I discuss other armed forces retiree benefits, including admission to base facilities such as the:

• Commissary
• Base Exchanges
• Gyms
• Hobby activities where bachelor, such as the Machine Hobby Store, Woodworking Shop, MWR facilities, picture show theater, etc.

These base activities can be a smashing way to save coin, participate in hobbies, and continue to be a role of the armed forces customs.

Military Hops – Space-A Travel: Armed forces hops and Space-A travel are another topic we discussed. These can be a nifty way to run across the globe on the cheap.

Basically, flying Space-A allows you to fly on armed forces transport if there are available seats. You pay a nominal fee (usually merely a few dollars). You tin can often discover trips going all over the globe, and many of the flights get out on a regular basis. In that location are some downsides, however. Because you are flying on a infinite-available footing, y'all may non exist able to get the flight on the day or time y'all want. Flexibility is the central if you use Infinite-A travel!

At that place are a few differences for Infinite-A availability for Guard and Reserve retirees. The fellow member is eligible to fly Space-A if they are a Gray Area retiree, simply their dependents may not be eligible until the servicemember reaches age sixty, which is when their retirement is on par with an active duty retirement.

Benefits for Spouses & Dependents

Benefits for your dependents, including your spouse and children, are similar going to be like to when you lot were on active duty, with the exception of your health care which volition depend upon your specific situation (whether you are eligible to use TRICARE Prime, or are required to utilise Standard). Spouses and Dependents still maintain base access and access to the Commissary, Exchanges, MWR facilities, and other base activities.

Did nosotros miss anything? Military retirement is a huge topic, and nosotros tried to encompass as much as we could in the 40 minutes or so that we talked. I also did my best to get the main points down on paper for those who prefer to read. Delight leave a note in the comments if we missed anything and nosotros'll address it. Thanks!

Ryan Guina is The Military Wallet's founder. He is a writer, minor concern owner, and entrepreneur. He served over vi years on agile duty in the USAF and is a current member of the Illinois Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty armed forces service and has been writing about financial, pocket-sized concern, and military benefits topics since and so. He also writes about personal finance and investing at Cash Coin 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, residuum his investment portfolio, runway his income and expenses, and much more. You can open a free Personal Capital business relationship here.

Featured In: Ryan's writing has been featured in the post-obit publications: Forbes, Military.com, The states News & World Written report, Yahoo Finance, Reserve & National Baby-sit Mag (print and online editions), Military Influencer Magazine, Cash Coin Life, The Armed services Guide, USAA, Go Banking Rates, and many other publications.

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Source: https://themilitarywallet.com/guard-reserves-retirement-benefits-guide/

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