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  Step 1 - Define goal
  Step 2 - Gather data
  Step 3 - Get educated
  Step 4 - Assess situation
  Step 5 - Develop plan
  Step 6 - Make changes
  Step 7 - Get help
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  Military Retirement
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Military retirement

Since 1957, all members of the U.S. Armed Forces have been covered by the Social Security program. Those individuals with 20 or more years of service are also eligible for retirement benefits under the military retirement system, and the military member contributes nothing to this system.

For military members who entered service before September 8, 1980, the Final Pay retirement system (Plan-A) applies. This is equal to 2.5% of a servicemember's final basic pay for each year of service. To determine your retirement pay under this system, use the Final Pay calculator.

For those who entered the Armed Forces on or after September 8, 1980, and before August 1, 1986, the formula uses the average of the highest paid 3 years instead of final pay. It is still equal to 2.5% of this average for each year of service. The High-3 Year retirement system (Plan-B) also applies to members who first entered the Service on or after August 1, 1986, and choose to revert to this plan by NOT accepting the Career Retention Bonus (CRB). To determine your retirement pay under this system, use the High-3 Year Average calculator.

Persons who entered the Armed Forces after August 1, 1986 have two options: revert to Plan-B (High-3) or elect the REDUX + CRB plan (Plan-C) and receive a taxable $30,000 CRB to be paid at the 15-year point with a service commitment of 20 years. For retirement purposes, pay is computed at 40% of basic pay, with a 3.5% increase each additional year after 20. To determine your retirement pay under this system, use the REDUX + CRB calculator.

Survivor Benefit Plan (SBP)
At retirement, full basic SBP for spouse and children will take effect automatically if you make no other valid election. You may not reduce or decline spouse coverage without your spouse's written consent. SBP elections cannot be canceled or changed after retirement except in specific instances such as a change in your marital status or after the loss of a beneficiary.

The SBP annuity is determined by the base amount you elect. The base amount for spouses may range from a minimum of $300 up to a maximum of full retired pay. The annuity is 55 percent of the base amount until age 62 and is 35 percent of the base amount if age 62 or older. Children are eligible for SBP payments as long as they are unmarried, under age 18, or under age 22 if still in school. A child who is disabled and incapable of self-support remains eligible if the disability occurred before age 18 (or before age 22 if a full time student). Marriage at any age will terminate a child's eligibility.

The SBP premiums for spouse coverage are:

  1. 6.5% of your chosen base amount, or if less,
  2. 2.5% of the first $635.00 of your elected base amount (referred to hereafter as the "threshold amount"), plus 10% of the remaining base amount.

The threshold amount was $635.00 as of January 1, 2006. The threshold amount will increase at the same time and by the same percentage as future active duty basic pay.

If you would like further information about SBP, visit the military compensation site.

Medical Care
The Department of Defense also provides medical care for active duty personnel, retirees and their dependents. In addition to care in the hospitals and clinics maintained by the Department, the dependents of active duty personnel and retirees and their dependents are eligible for a program called the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). This program shares the cost of civilian medical services when
care is not available at a military facility. Direct care facilities and CHAMPUS are both funded through the Department of Defense.

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