Retirement
As a new Guard member, retirement may be the last thing
on your mind. You may think only older people should concern themselves with
retirement. In reality, there are two important reasons why now is the
best time to begin planning for your retirement. The longer you wait:
- The more aggressively you will need to save to fund your retirement.
- The older you will be when you can actually afford to
retire.
If you serve long enough to earn a
guard retirement, at age 60, you will receive retirement income. You will also
qualify for health care benefits, including medical care for yourself and your
dependents, and personal dental care, with limited care for your
family.
The good news is that every day you
serve with the Army National Guard you earn points toward your eventual
retirement pay. The more points earned, the higher your retirement pay. With
experience, you will learn how to build these points and when you retire you
will be thankful for every retirement point you've earned over the years. The
ARNG is a great way to earn extra income and one of the few part-time jobs where
you can actually build a retirement income.
In order to help you to understand
how this system works, below is a simple version of how retirement benefits are
calculated in the Guard. This will be followed by the actual formulas for
computation.
A simple version :
The first step in calculating what
your retirement pay will be is to add up all of the retirement points you’ve
earned over the years. Next you divide the points by 360 days. That gives you
the total years of service. Then you multiply the total years of service by 2.5
percent (.025) and you get what is called the “benefit multiplier.” Finally, you
take your monthly basic pay at retirement and multiply it by your benefit
multiplier.
If a Guard member joined on or after
September 8, 1980, then the “high-three” (three highest earning years) average
of basic pay is the figure used—instead of your monthly basic pay at retirement.
The resulting number is your monthly retirement pay for age 60.
This is a simplified version of how
it works. Armed with this basic knowledge, you can make better sense of the
following formulas for computing approximate monthly retirement pay.
Reserve Retired Pay Formula for members
who
Joined on or after 08 September 1980:
The number of retirement points,
divided by 360 days equals total years of service times
0.025 equals ____ (also called the “benefit multiplier”) times
monthly basic pay equals the monthly retirement pay for age 60.
Reserve Retired Pay Formula for members who:
Joined on or after 08 September 1980:
The number of retirement points,
divided by 360 days equals total years of service times
0.025 equals _____ (also called the “benefit multiplier”) times average
of the “high-three,” or the high 36 months of the monthly active duty basic pay
equals the monthly retirement pay for age 60.
Lets take a look at an :
An Army National Guard member, who
joined in 1981, retires as a Sergeant in 2000.
Step 1 - Add the Guard member's total
number of retirement points. We will use the figure 2800 for our example.
Step 2 - Divide the number of
points(2800)by 360 days and the result is 7.78 years of service.
Step 3 - Multiply the years(7.78) by 2.5
percent(0.025) to get the figure of 0.195. (This figure is also called the
"benefit multiplier.")
Step 4 - Multiply this
figure(0.195)by the "high-three" average,or the average of highest 36-months of
basic pay in one's career, which we shall say is $2,800 per month.
0.195 times $2800 equals $546
In this example the sergeant will
begin drawing a $546 retirement check at age 60 that will continue for life.