A simple way to estimate your pension.
I’ll be posting a series of posts over the next few weeks about how to estimate your military retirement pension and also about how to calculate the premiums for the Survivor Benefit Plan (SBP). My hope is that this helps give you the necessary information to help give you the peace of mind to make a more informed decision on these topics.
There are many reasons why one serves their country and it’s not just about the money. But, wouldn’t it be helpful to know what that potential benefit of your military pension would be? It could definitely give me a more informed decision to go with your choice to continue to serve.
For those of you that are near or are reaching your eligibility for retirement, knowing this can leave you better informed so you can start making plans to know what your pension would look like so you know what kind of lifestyle you’ll be able to maintain after you retire.
So here it is. No smoke and mirrors. No, here is the formula and you figure it out.
All you need is some basic information about your service and your all set. I would have your Leave and Earnings Statement (LES) with you because you’ll need some information from it. Use this calculator here Military Compensation . There are three calculators that really apply to today’s service members. You either fall into one of these scenarios: 1. BRS Calculator, 2. High-3 Calculator, and 3. REDUX Calculator.
I’ll be focusing this post on the High-3 Calculator.
STEP 1
Select the radio button, which applies to you. I’ll choose Active Component.
STEP 2
Answer the questions and select the answers that apply to you. In my example I chose to use a person that was born January 1980, with a Pay Entry Base Date (PEBD) of January 2000, who has a pay grade of W-4, and will retire with 23 years of service. You can find your PEBD on your LES. Then click continue.
STEP 3
For this part, I would zero out all the values here. What we are concentrating on is estimating what your military pension will be. Not what your Thrift Savings Plan (TSP) account balance will be by the time you retire. Besides, in my opinion this is just a distraction from what you really need to know. Then click continue.
STEP 4
This next part is your Career Progression. For you, were you the grade you selected for the last three years? Then you can just leave this. If not, then you would change the grade at year 21 to W-3 and then leave the rest W-4 (in my example). Then click continue.
STEP 5
There you have it! For my example, W-4 at 23 years of service will have about $53,587 a year or around $4,465 per month. Divide by 12 and you’ll have your monthly pension before taxes. If you notice, the graph in 2022 shows your basic pay. Then 2023, the first year you retire is your yearly pension. If you retired in a different month besides January like in my example. Then the graph in 2022 would have a split amount between base pay and your pension. The next year would your full pension you would roughly have.
You can also click on print and you get the full break down of year by year in numbers form. Also, you can change it to “Today’s” dollars. I can go into it on why it’s important but then I’ll start to get all nerdy and I really don’t want to put you to sleep. If you have any questions, feel free to send me a quick message on LinkedIn, or comment on my Medium blog.
For my next post, I’ll address the all too common question. So what will my SBP Premium be?
Disclaimer: The views and opinions presented herein are those of the author and do not necessarily represent the views of DoD or its Components. Appearance of, or reference to, any commercial products or services does not constitute DoD endorsement of those products or services. The appearance of external hyperlinks does not constitute DoD endorsement of the linked websites, or the information, products or services therein.
