Transitioning military personnel have a great deal of work ahead of them as they prepare to retire from the military. After all the paperwork has been filed and retirement looms, the next thing they will want to get used to is a reduction in income. A reduction in military income is inevitable once you retire, but how can you get used to a reduction in income before you retire from the military?
How Much Retired Military Pay (Pension) Will You Receive?
The amount of retired military pay, or pension, that you will receive upon retirement will depend on several factors, namely your length of time spent in the military, time in grade and your rank at the time of retirement. Once you have factored in these and other considerations, you will be able to work out how much pension you will receive.
Get Used to Living on Your Retired Military Pay for 6 Months
Once you have calculated how much you will be receiving each month from your retired military pay, you should start to adjust to the reduction in military income by living on that amount for the next 6 months. Getting used to the reduced pay rate will likely come as a huge shock at first, as many transitioning military personnel will have to get used to a reduction in income of up to 50 percent or more.
However, if you plan well in advance before you retire by trying to get by on the reduced income, you can bank the rest into a high interest savings account, and see how well you are prepared to cope with the reduced income. This test will also help you to look at ways in which you have been overspending and help you to look at ways to trim your expenses and tighten your belt.
Getting used to a reduction in income following military retirement is not always easy, especially if you do not have another job lined up once you retire from active duty. But it can be much easier if you plan several months in advance. Start by working out how much retired military pay you will be entitled to and then test yourself for 6 months prior to retirement to see how well you can get by just on that amount.