May 1

E7 Retirement Pay: How to Use the Military Retirement Calculator

Retirement Pay For E7 With 20 Years

For all the non-commission officers who have been in for a while and are planning on retiring soon, it's important to understand how much retired pay you'll be entitled to.

Its common knowledge that many entered service not only collect a basic pay and housing allowance, but also to complete 20 years or service to earn retirement benefits.

The retirement system calculator is a tool that can help you estimate your monthly retirement benefits when you retire from service. However, there are many other factors that will affect your final earnings including: the number of years served, rank, time in service and whether or not you're married.

For retired military personnel to get an accurate calculation of what your monthly pay might look like before you make any decisions about leaving the military watch this video to calculate your retired pay after active service.

If you are an E7, chances are you have been thinking about your retired pay for when you retire. But what do the numbers really mean?

This tool can help you determine if it's best for you to retire now, wait until later, or postpone your decision altogether. You can also use this calculator as a tool to estimate how much money will be lost in benefits by electing early active duty retirement pay versus delaying that election until later in your career when more years have been added onto your service time.

DFAS High 3 calculator screenshot

-> Click the Photo to Access the Calculator <-


How to use the High-3 military retirement calculator?

The High-3 Calculator is used to calculate the monthly retirement pay for active duty and reserve components of military service. It takes into account the highest 36 months of basic military pay received by a service member during any period of continuous active duty including any periods of active duty for training. The High-3 calculator can be used to estimate "High 3" retirement pay, which is the average of the most recent 36 months' basic pay upon retirement.


Military Retiree pay options

They can be confusing for military retirees and service members counting their retirement points. What if you could look at one simple online calculator and be able to see your military retirement pay for any rank or number of years served before deciding whether it's worth staying in the military? Like all things in the military, there are several factors that contribute to determining your retirement pay.

Retirement pay is determined by multiplying your average base pay for each year of service times 2.5 percent. That's multiplied again by the number of years you've served over 20 years. However, most people have seen their military pay decrease year after year due to the pay caps imposed by Congress for military personnel. You also have to be aware of how long you've served plus any other time in service that could affect your final number.

The government has a few legacy military retirement pay programs. The choices of which one to choose will depend on when you enter military service. Veterans in active service after 1986 have enrolled in the Final Pay Retirement Pay System or High 36 Retirement Pay System. Those whose registration was made after 1 January 2019 will be eligible for the Blended Retirement System.


Do you want to protect your military pay?

There are risks that the government will make you pay life insurance premiums for VGLI or SBP payments from your monthly income. These are sunken costs and it's not something anyone wants to deal with. You need to learn about the Spouse benefit plan so that you can protect all of your monthly retirement pay and avoid this risk.

The Spouse Benefit Plan is an insurance strategy designed specifically to benefit the entire family of retired service members who receive retirement benefits, especially while everyone is still alive.

It provides coverage against certain costs associated with death, disability, or medical expenses in exchange for a premium payment life any life insurance policy. What is new is the flexibility that the Spouse Benefit Plan offers.


E7 pension vs SBP

What is the retirement pay for an E7 with 20 years?

As of 2022 the pay calculation projection an E7 retiring with exactly 20 years of service would receive $27,827 per year. It's important to note the present value of almost $800,000 for a 40 year old receiving this pension indefinitely. The above video will show you how to use the retirement calculator to determine an estimate for your pay. Learn to calculate the present value of military pension here


Can you live off military retirement pay?

Modern technology has made it easier than ever to adjust your lifestyle to an income you need. While E7 Retirement pay doesn't reach the medium income level of most American cities, it does offer steady income that frees up opportunity to start an online business or side-hustle.


Can I lose my retirement pension?

Yes, the pension is tied directly to the life of the retiring service member, but no one else. This means that when the veterans dies the pension payment ends. This is why its important to implement a military retirement pension protection plan. The plan must be implemented before the veteran dies or else all of your hard earned retirement benefits will go to waste.

We can also help you figure out how much money you should put into this type of protection plan. For example, if you know that your life expectancy is 40 years then you need to implement a military pension protection plan that will make sure your spouse will be taken care of for the rest of his/her life.


Are widows of veterans eligible for benefits?

It depends on if the veteran selected the survivor benefit plan (SBP). If so, the surviving spouse would receive 55% of the pension paid monthly for the remainder of his/her life. The SBP does have a 6.5% pension cost in order to participate. Therefore, a retiring E7 could expect to pay almost $80,000 of retirement pay to cover SBP costs over the 30 year enrollment period. 

The average E7 would receive $2683/mo pre SBP. Post enrollment, death benefits will only be about $1,000 per month. This is because the survivor benefit plan offsets SDB costs over time.


Creating a Retirement Plan based on years of active duty time.

The military retirement pay system is notably complex, with even the most senior officers having no personal experience with it prior to reaching their own retirement rank. Military members are often very curious about how much they can expect to receive in retirement benefits, but the variety of options available to retirees and the complex pay rules make it difficult for them to make calculations on their own.

Military retirement pay is not the same as private-sector retirement plans, although some features are similar. Military members do not accumulate money in individual accounts during their service, but instead receive a regular stream of payments after they retire. The exact size of the payment depends on several factors, including the number of years that the member has served and his or her final pay grade before retirement.

SBP details and graph


How Can I Avoid the Costs of the Survivor Benefit Plan?

The traditional approach to implement a SBP alternative was to purchase a low cost term insurance policy. After years of research, we discovered that this approach can backfire because only 2-3% of term insurance policies are ever paid. The other alternative is usually whole life insurance that is sold at a high cost without enough coverage. 

These are the problems that we realized no one else was solving when we created the Spouse Benefit Plan. The most modern alternative to the expensive Government Insurance programs. You can learn more about how to avoid the costs of SBP and VGLI here. 

Do you Have Financial Questions about your Military Retirement? Ask us Here and We will email you.

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