Retirement Pay E7 20 Years: How to Use the Military Retirement Calculator
For all the non-commissioned officers (i. e. , retirement pay E7 20 years) who have been in for a while and are planning on retiring soon, it’s essential to understand how much military retirement pay you’ll be entitled to. Military retirement planning is essential for ensuring that you can maintain your desired quality of life after leaving the service. Understanding the intricacies of the retirement pay system, including factors such as rank, years of service, and potential deductions, can help you make informed decisions about your financial future. It is also wise to consult with a financial advisor who specializes in military retirement planning to develop a comprehensive strategy that aligns with your long-term goals.
It’s common knowledge that many entered service to collect a basic pay and housing allowance and to complete 20 years of service to earn retirement benefits.
The retirement system calculator can help you estimate your monthly retirement benefits when you retire from service. However, many other factors will affect your final earnings, including the years served, rank, service time, and whether 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.
What’s Missing From Your SBP vs Life Insurance Decision?
Most military families leave money on the table because they don’t know their options. Download the guide to discover the War Chest Strategy—the smarter alternative to SBP.
Calculating Retirement Pay For E7 With 20 Years
If you are an E7, chances are you have been thinking about your retirement pay for when you retire. But what do the numbers mean?
This tool can help you determine whether to retire now, wait until later, or postpone your decision. You can also use this calculator 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 to your service time.
-> Click the Photo to Access the Calculator <-
How to use the High-3 military retirement calculator?
The High-3 Calculator calculates the monthly retirement pay for active duty and reserve components of military service. It considers 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 estimate “High 3” retirement pay, the average of the most recent 36 months’ basic pay upon retirement. Additionally, the High-3 Calculator takes into account the cost of living adjustments (COLA) and includes any special or incentive pays. This tool is helpful for service members to plan for their retirement and understand the potential financial benefits of active duty. By using the High-3 Calculator, individuals can make informed decisions about their future and ensure they are maximizing their retirement benefits.
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 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, several factors determine your retirement pay.
Calculate your Retirement pay by multiplying your average base pay for each year of service by 2.5 percent. That’s multiplied again by the 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 must also know how long you’ve served and any other service time that could affect your final number.
The government has a few legacy military retirement pay programs. Which one you 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 registered 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 that no one wants to deal with. It would help if you learned about the War Chest Strategy to protect your monthly retirement pay and avoid this risk. By utilizing the War Chest Strategy, you can safeguard your retirement income and have a plan in place to cover any potential life insurance costs without impacting your monthly pay. This strategy can provide peace of mind and financial security for your future. Additionally, it is important to explore all of your retired military insurance options to find the best fit for your individual needs and circumstances.
The Spouse Benefit Plan is an insurance strategy explicitly designed 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 for any life insurance policy. What is new is the flexibility that the Spouse Benefit Plan offers.
What is the retirement pay for an E7 with 20 years?
As of 2022, the pay calculation projection for 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 estimate your pay.
Can you live off military retirement pay?
Modern technology has made adjusting your lifestyle to the income you need more accessible. While E7 Retirement pay doesn’t reach the medium income level of most American cities, it does offer steady income that frees up the 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 veteran dies, the pension payment ends. This is why it’s 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 determine how much money you should put into this protection plan. For example, if you know that your life expectancy is 30 more years but your spouse’s is 40 years, then you need to implement a military pension protection plan to ensure your spouse’s well-being for the rest of his/her life.
Are widows of veterans eligible for benefits?
It depends on whether the veteran selected the survivor benefit plan (SBP). If so, the surviving spouse would receive 55% of the monthly pension for the remainder of their life. The SBP does have a 6.5% pension cost to participate. Therefore, a retiring E7 could expect to pay almost $80,000 in 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 before reaching their retirement rank. Military members are often curious about how much they can expect to receive in retirement benefits. Still, the variety of options available to retirees and the complex pay rules make it difficult for them to calculate independently.
Military retirement pay differs from private-sector retirement plans, although some features are similar. Military members do not accumulate money in individual accounts during their service but receive regular 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 their final pay grade before retirement.
How Can I Avoid the Costs of the Survivor Benefit Plan?
The traditional approach to implementing an SBP alternative was to purchase a low-cost term insurance policy. After years of research, we discovered this approach can backfire because only 2-3% of term insurance policies are ever paid. The other alternative is usually whole-life insurance, which is available at a high cost without enough coverage. Many military families have turned to whole-life insurance as a way to secure their financial future and ensure their loved ones are taken care of in the event of their death. However, whole-life insurance policies can be costly and may not provide enough coverage to fully support military survivor benefits. As a result, many service members and their families are seeking alternative options to ensure their financial security.
We realized no one else was solving these problems when we created the Spouse Benefit Plan, the most modern alternative to expensive Government Insurance programs. You can learn more about how to avoid the costs of SBP and VGLI here.
Although the retirement system calculator can give you a general idea of your monthly benefits, speaking with a life insurance consultant is essential to get a more accurate estimate. That’s why we offer free consultations to military retirees. We want to ensure you have all the information you need to make the best decision for your family. If you’re ready to retire soon, don’t wait another day! We can help you understand your life insurance options and how they will work alongside your retirement benefits. Our knowledgeable consultants can provide personalized advice based on your individual circumstances and needs. Take the first step towards securing your future and schedule your free consultation today.
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USN(R) Trevor Maxwell, ChFC®, ChFEBC℠
Trevor Maxwell is a retired U.S. Navy veteran with over 20 years of experience in uniform. He had dedicated his post-military life to educating and empowering military and federal retirees on protecting the value of their pensions, maximizing their survivor benefits, managing their TSP after their retirement, and getting the most out of their federal and state benefits. He is a licensed Life Insurance Agent and Investment Advisor Representative and hold the Chartered Financial Consultant (ChFC®) and Chartered Federal Employee Benefits Consultant℠ professional designations.
Disclaimer: The views expressed by Trevor Maxwell and US VetWealth are for educational purposes only and do not constitute financial, tax, or legal advice. Scott is a licensed insurance professional offering financial services and products. Always consult with a qualified advisor before making financial decisions.
