Planning for military retirement: The benefits that will help you and the challenges you may face

What does retirement mean to you? I’m sure you have your personal definition—most people do. Yet the word “retirement” can be ambiguous. The traditional definition simply means to stop working, or it could mean the period of someone’s life after they stop working. But ask 10 people what retirement means to them, and you will likely get 10 very different answers.

Just as there isn’t a standard meaning for the word “retirement,” there is no standard for military retirees. Some Veterans retire and never work again, but many military retirees go on to bridge careers that span the gap between their military career and the time they hang up their hat for good. Still others may occupy their retirement years through self-employment, or they may simply work for the pleasure or the challenge, not because they need the money. There is nothing right or wrong with any of these options. What really matters is what retirement means to you.

There’s no doubt that retirement is different for members of the military than it is for civilians, but there are some similarities as well. The goal is to think about what retirement means to you. Once you have your definition of retirement, you can begin taking the necessary steps to achieve your goals.

4 ways military retirement is different

1. Inflation-protected retirement pay. A pension is nice. A pension that is indexed for inflation is excellent! Here’s why inflation protection is so valuable: Inflation slowly eats away at the value of the dollar. Over time, that same dollar can’t buy as much. You’ve surely noticed that in general, the cost of living has increased over the last decade. And if you’re a seasoned retiree, the cost of living has probably doubled or tripled since you first entered the workforce. Thankfully, military retirement pay has a built-in cost of living adjustment (COLA), and your monthly income will increase over time. Military retirement pay is indexed to the Consumer Price Index, which is the same measurement used for Social Security benefits. Having your retirement pay indexed to the cost of inflation gives you more security in retirement, allowing you to better keep pace with inflation and the rising cost of living.
2. Medical care for life. Military retirees and their family members have access to one of several military healthcare plans (Tricare Prime, Tricare Standard or Tricare for Life). These plans do have an associated cost, but the premiums are substantially lower than healthcare through almost any other source. The best part? Healthcare is guaranteed for military retirees and their qualified dependents, regardless of their age, health or other factors. The premiums for each of these plans is standardized for all participants, again, regardless of age, health and other factors. The cost of medical care is rising much faster than inflation and the cost of most other goods and services. Having guaranteed access to affordable healthcare takes much of the guesswork and uncertainty out of retirement.
3. Non-tangible military benefits. Military retirees continue to have access to base amenities, benefits and other perks that can make life just a little bit sweeter. Retirees have access to money-saving shopping experiences such as the base commissary or base exchange, where goods are generally less expensive than off-base stores, and are sold tax-free. Other on-base attractions include the base clubs, bowling, movie theaters, and activities and travel through local Morale, Welfare and Recreation programs. Finally, military retirees are eligible for space-available travel, which can be an excellent way to travel on military aircraft on a standby basis for pennies on the dollar. You need to have flexible travel plans, but this can be an inexpensive way to see the world and bond with other military members and retirees.
4. Lifelong membership in a special community. The military is one of the oldest and largest organizations on Earth. Regardless of when and where you served, there is an automatic kinship with other Veterans. This kinship spans generations in a way not found in other groups or organizations. I don’t think it’s possible to quantify what it means to belong to a group or community. But it’s immensely valuable and underrated, especially in your retirement years. If you’ve served in the military, I’m sure you know exactly what I mean.

3 ways retirement is the same

The above section paints a rosy picture for military retirees. In many ways, military retirees do have a leg up on retirement, but regardless of your military service, there are some elements of retirement that are the same for everyone. Here are some of the big-picture aspects of retirement you don’t want to ignore.

1. You still need a purpose. Many people wrap their identities around their job, and no longer working can lead to an identity crisis. This is common among military Veterans and retirees from all walks of life, but it can be more pronounced for military retirees who may have served over half their life in the military before they retired. It is essential to your well-being to have other social outlets besides your work. This can include community involvement, hobbies, volunteer work, sports, travel and other social activities.
2. You may still need to work again at least part time. Many retirees find the desire or need to continue working in their retirement years. There are many reasons for this. Some work because they need to supplement their retirement income, while others find they simply enjoy the camaraderie or challenges that come from working. Some people are even hard-wired to continue working, long after they have earned enough money to support their golden years in style. Don’t let the word “retirement” stop you from working if you feel the need or the calling to continue to work.
3. The best time to start planning your retirement is now. A successful retirement doesn’t just happen. It takes years of foresight and planning to pull off. It all starts with a vision. Grab a cup of coffee and spend some time visualizing your dream retirement. Being on the same page as your spouse is essential, so be sure to include your spouse if you are married. Start by writing down how you envision your retirement. This could include topics such as where you will live, whether you plan on traveling, and other topics that are important to you.

Then, start thinking about how you will be able to afford your dream retirement. At the minimum, you will want to address finances, such as understanding your retirement pay and benefits, paying off any consumer debt, and saving more money in your retirement accounts, like your Thrift Savings Plan or Roth IRA.

But there is more to retirement than just money. Where will you live? Close to family or a military installation? Will you relocate so you can start a second career? Perhaps you want to build your own home out in the country. The possibilities are almost endless, but they’re up to you. And with so many options, it’s best to start planning now.

Ryan Guina is a military Veteran, small business owner and current member of the Air National Guard. He writes for RothIRA.com, TraditionalIRA.com and several other popular online publications