Originally Posted by
e6bpilot
Really, the pay cut isn't that massive as a retiree. As an O-4, no bonus, with flight pay, I make around 95K. Now I am retiring with full health care and bennies. I will net around 40 a year from uncle for retiree pay ... All in all, it is pretty much a wash and I may even come out ahead.
E6B, I'm sure you've ran you numbers in detail, but I retired from the USAF 4 years ago (O-5 pilot), and my retirement with 22 years 1 month of service is closer to 1/3 of what I was making on AD. I know they advertise 50% at 20 years (my math is 55.2% of my base pay), but the things easily forgotten are:
- Tricare as a retiree will cost about $550 per year for the family (still an incredible price!)
- Retiree dental is about $160 per month for the family
- If you take SBP (I did), it comes out of your paycheck, too. Mine is about $260 a month.
- Life insurance: I took the VGLI when I retired; $400k coverage costs $1k per year
- Every penny you earn (military retirement, airline pay, etc.) is now taxed. This is one big gotcha, as you don't realize how big a deal all the "allowances" you were getting paid that weren't taxed. As an O-5, I paid almost nothing in taxes (I have 6 kids, so the child tax credit was HUGE!). As a retiree, I feel like Uncle Sam is having me make up for lost time in taxes, and as the kids get older, that tax credit gets less and less.
Currently, I have a job that pays well, and that plus my retirement is about the same I was making as an O-5 in gross pay. However, due to taxes and the increased expenses, my net is less than it was before.
All-in-all to say, the math I came up with prior to my retirement was my gross retired pay would be about 1/3 of my gross AD pay (with flight pay, housing allowance, COLA, etc.). Just want you to have the numbers from my experience.