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URL:  http://boards.fool.com/isnt-the-difference-between-retiring-at-20-or-30-30489571.aspx

Subject:  Re: Need Present value (?) calculation help Date:  1/16/2013  6:33 PM
Author:  DragonTales Number:  71256 of 75880

Isn't the difference between retiring at 20 or 30 years from the military - 1/2 salary or full salary ? So for staying 3 years, he doubles his retirement income for the rest of his life ?

No, it's graduated, monthly, between 20 & 30 years, and between 50% & 75% of base pay, respectively. Goes up by ~.2083% per month (2.5% per year). So, if someone stayed in for 24 years and 4 months, their retirement multiplier would be 50% + 52/120*25% or 60.833%. But retirement pay is based on base pay, not total pay. Little gotcha that's not well known.

Pay breakdown (as a percentage of what you see in your paycheck):
~70%  Base Pay
~30% Basic Allowance for Housing (BAH)

So if you retire at 20 years of service, your retirement is really about 35% of your pay(check), and that goes up to 52.5% if one serves 30 years.

If he makes it to 52, he's expected to live to 79(according to a quick look at the SS tables).

Regarding the life expectancy, I used this SSA site: http://www.ssa.gov/OACT/population/longevity.html

When I insert an age to make it say the person is 52, it shows that they should live 30 years.

Tails
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