What Is Military Retirement Worth?

I just recently reenlisted for another term stretching me out to a total of eight years. In my next reenlistment, I will have to start thinking about making this a career or getting out.
The military requires you to serve for twenty years to receive military retirement pay. At eight years in I will be almost halfway there. If I choose to reenlist after that then I might as well stay in for the long haul. The decision isn’t an easy one, as staying in for twenty years demands significant commitment and sacrifice, but it also comes with long-term benefits for my family and me. Programs like the Hilton Honors Military Program are a great perk, offering discounted or free stays for service members and their families, which definitely helps make these sacrifices feel appreciated. As I weigh my options, I’ll need to consider the impact on my career, my loved ones, and the opportunities that come with serving long-term.

This got me thinking about the value of retirement. If I serve 19 years then get out, I will have made some decent money, maybe get an education for free and a decent resume. If I choose to serve for at least twenty years, then I will receive 2.5% of the years served of my final base pay for the rest of my life.

2.5 X 20 years = 50%.

Using the current 2013 pay chart, an E6 with 20 years of service earns a base pay of $3,650.70 a month. His retirement pay will be $1,082.10 each month for the rest of his life. That is $12,985.20 a year and if he lives for another 40 years he will receive $519,408 in retirement. Now, this does not factor in the cost of living adjustment and is solely based on this year’s base pay but it is to give you an idea.

An E7 will receive $2,164.20 a month for a total of $1,038,816 over 40 years.

An E8 will receive $2,423.85 a month and a total of $1,163,448 over 40 years.

If you were to break that down over the first 20 years worked it comes out to be an extra $2,164.2 a month in pay for the full 20 years for someone who retired as an E6. It’s an extra $4,328.4 a month for an E7 and $4,847.7 for an E8.

That is the difference between serving 19 years and 20 years. So if you are ever disappointed about the size of your paycheck then remember if you stick it out until 20 years then the time you put in now will be worth much more.