How a Military Retirement Actually Works

If you're interested in the Air Force retirement pay and benefits, we're gonna discuss the blended retirement system and the thrift savings plan in this video. Everything from how much of pension you receive from the blended retirement system, how the thrift savings plan is similar to a 401K, all the different funds in the thrift savings plan, how much you can expect to receive at age 60 if you save 10% from day 1, and also the continuation pay you receive at the half way mark. It's jam packed with good financial information, so pay close attention as I help you plan for the next 40 years.
www.military.com/benefits/mil...
www.military.com/daily-news/2...
www.tsp.gov/funds-individual/
Intro - 0:00
Pension (Top 3 explanation) - 0:08
Thrift Savings Plan explanation - 1:26
Thrift Savings Plan Funds (Lifecycle Fund) - 2:40
Thrift Savings Plan calculator (Become a Millionaire) Sound degrades because of a copyright claim - 3:14
Blended Retirement Continuation Pay - 4:32

[@rboston33]

Hi. Love your great videos but have a question on TSP. You said you can't touch it until you're 60. Isn't there a provision to withdraw some at retirement to purchase a home?

[@Jodywithawhy]

You actually can touch the money before 60 and I probably should’ve clarified that better. It’s just not recommended to touch the TSP before 60 because of penalties and taxes, but more importantly losing out on the power of compound interest, so I tried to stay away from it. The early withdrawal penalty is a 10% penalty. In addition to any taxes you owe on your withdrawal, you will owe an additional 10%. You can also take a loan out on your money with a really low interest rate that may help with a home loan. So yes there are ways to access this money before 60, just wanted to keep it simple and easy for people who’s first time hearing the benefits. But you’re definitely right. 💪🏽 Here’s a link explaining it in further detail. www.tsp.gov/planning-for-life-events/buying-a-house/

[@pdub4419]

Love the videos man. I’m enlisting soon, I want to be an Air Traffic Controller and your videos are useful. Much love

[@Jodywithawhy]

Thanks for watching. It means a lot. Hopefully you get your number 1 pick. 🙌🏽

[@evilload]

Use a VA home loan. You do not have to put money down or worry about mortgage insurance. Have to pay the funding and admin fees unless you are service connected through the VA (funding fee waived).

[@justmontina]

This was extremely helpful. My husband retired 21 years in the army and also is 100% service disabled veteran. I bring in six figures a year so, his two checks pay all the bills and he also has a government job and my money is for fun, free and do whatever we want as well as to save. He loves working so, he’ll probably do it forever, even if he’s a Walmart greeter. We’re pretty much set for life and I’m so grateful.

[@BrendonCarr]

When you talk to a young person about a 20-year military career, never mind a four- or six-year enlistment, most of them recoil in horror at how long a period of time they might be committed to the Air Force. *It's not a long time at all - in fact, 20 years is the blink of an eye.* I'm almost 52, and it feels like yesterday I got out of the Navy to go to law school after my five-year enlistment (I got out 27 years ago). When I look at people 38 or 40 years old, retiring from a career in the service with a military pension, a fully-funded TSP account, and 20 to 30 years of work ahead of them - a whole second lifetime! - I am jealous of the possibilities. Forty years old is YOUNG, especially because the servicemember can set him- or herself up for the next stage by continuing education, acquiring professional credentials, or starting a business while in the final years of active duty.

[@Jodywithawhy]

Definitely. I’m at 15 now and it flew by. When I first started I thought 20 was impossible. Lol

[@tretrizzy33]

Wish I listened when i was fresh out of highschool and not 5 years later 🤦🏽‍♂️🤦🏽‍♂️

[@Jodywithawhy]

Ahh man. You still have a lot of time. You can still make a ton of cash if you get started soon.

[@spearbun]

My husband and I are mil-to-mil started at 20. We’ll be out between 40-45 years old with two retirements, two TSPs, and two homeowner loans; not to mention our own personal savings. Very excited for our future 🥰

[@bunnyman6321]

@@spearbun That's if you two still be married by then. Good luck to you!

[@elyciachanel8840]

I’ve been binging your channel today. Your content is straight to the point, creative, high quality and short videos which keep my attention. You’ve educated me and I’m grateful I found you. ❤

[@Jodywithawhy]

Thank you for that, and I’m glad I could help. 🤙🏽

[@neildollar]

Yet another great video. You seem to be answering the questions we have before we ask. Thanks for high quality and informative information.

[@Jodywithawhy]

Thank you so much. 💪🏽

[@LonerBecause]

Appreciate you breaking this down.

[@Jodywithawhy]

No problem. 🤙🏽

[@sarellyquezada7577]

Love your videos .

[@Jodywithawhy]

Thank you so much. 🙌🏽🙌🏽

[@julejosiah7281]

Great resource! Although the returns aren't as great as when I invest on my own, I will still get one.

[@Jodywithawhy]

Definitely gotta make sure it’s right for you. Just an opportunity we have. 💪🏽💪🏽

[@josiahunderwood7246]

Only 17 years to go😅😅

[@dw6752]

I thought with the BRS, you could get partial retirement before hitting 20 years. Thanks for the videov

[@kennixox262]

Glad I am on the old system of retirement, 50% of base pay, about $4,000 a month. Can you become wealthy from that? Definitely not and why I have a career after the military. I do know a guy, prior enlisted and retired at an O-5 after 31 year and over those years saved and I mean saved and invested to where at retirement had an investment portfolio of over 2 million dollars. Doubtfully, few could be a cheap as my fried was during those years.

[@anthonysciabarrasi2611]

put in 100k and get 1.7 mil back...crazy how all that works

[@Jodywithawhy]

Compound interest is crazy. It takes years to see it work massively, but it’s a beautiful thing.

[@101perspective]

I wish they had the TSP when I was in. That said, I did get 50% for 20 years service vs the 40% you get now.

[@fumoney6614]

Government backed Residual Income is worth millions.

[@damianwilliamson9015]

This applies to the other branches too

[@Jodywithawhy]

Yep. All military branches

[@alfredkamga7644]

@JodywithaWhy can you make a video about how to start to build up your retirement in the air force as a reservist ? i join the air force as an E-3 and i want tips to start saving for retirement as early as possible

[@Jodywithawhy]

You’re probably gonna want to start your own personal retirement plan. I would honestly recommend you sit down and talk with a financial advisor to develop that plan. I’m not a financial advisor and don’t want give out inaccurate information, but there’s a lot of youtubers out there, who give good advice for creating retirement plans.

[@evilload]

Get the TSP in the reserves. On the outside, get a job with a 401k and set up a Roth fund. Try to hit the yearly maximum for the TSP, 401k and Roth. EDIT: And go with aggressive funds if you are young. You have plenty of time to make up any future losses (unless you panic sell) when the market tanks.

[@moosemafia]

Older video so maybe you won't see this but I have a question about that bonus at year 12. Do they just cut you a check for that amount or is it deposited to your retirement account? Either way that's a pretty sweet deal! This video should be mandatory viewing for all new enlisted members. I wish I knew the power of compound interest and investing for retirement when I was fresh out of school. I didn't start saving until I was around 28...I remember doing the math a while back and if you contributed $500 a month from 18 to 30 to a Roth IRA (or in this case your Roth TSP) with an 8% return you could stop contributing at age 30 and still retire a millionaire! And since it's Roth that's tax free growth, which is great because it seems like a safe bet that taxes will be higher 30+ years from now 😅

[@Jodywithawhy]

Yea man. Me too. I wasn’t the best with money management and growth young. That’s why I did this to make sure I could educated the youth. But as far as the 12 year mark. They will cut you a check. Kinda like a bonus. So it’s nice especially if you invest the money.

[@plava8815]

would there ever be a reason this will be taken away from you? like is it protected from ression etc.

[@Jodywithawhy]

I honestly don’t know the answer to that. I know if you got into major trouble after retirement you could lose your benefits, but beyond that I’m not sure. I guess it comes down to the economy and sustainability of the program.

[@plava8815]

@@Jodywithawhy ok thank you, i was just thinking of like a bank where certain amount of money is protected if they loose it etc. nontheless, great video!

[@First426]

So what if I did 6 years active and 16 years reserve?...Would I still receive the retirement plan pay?

[@Jodywithawhy]

You would, but you wouldn’t be eligible for your pension until your later years. Closer to 60.

[@evilload]

Normal retirement in the reserves is at age 60. However, more deployment/contingency time you do moves your retirement forward in 90 day increments. So if you do 110 days in a particular fiscal year, you only get 90 days credited to moving your retirement forward (not sure if they still go by the fiscal year rule for this anymore). Your six years of active service would count towards the "points" that they calculate you retirement so that is a boost.

[@jon1930]

Do u get to keep your free tricare when u retire?

[@Jodywithawhy]

It’s not free when you retire, but it’s really cheap.

[@cwillfrommd]

If enlisting with master degree, why would it be start out with e3 unlike e4 in army. Can promotion come quicker because of master degree? What if secret clearance don’t finish after tech school or fail to obtain sc, will Air Force force me to take different mos.

[@Jodywithawhy]

Unfortunately in the Air Force the highest rank you can start out with is E-3. As far as the clearance, if they don’t finish it while you’re in tech school, they’ll continue working on it while you’re at your base. Sometimes you get held over at tech school and can’t leave until you get your clearance, it just depends on the clearance level and the base you’re going to. If you never get your clearance, they can kick you out, cross train you into a lesser sensitive job, or let you finish out your enlistment in your original job with limited roles. It all depends on what they find.

[@evilload]

Why not go commissioned? If you already have the academic credentials so might as well use them. A couple years ago, having a bachelors or advanced degree would not help you get promoted (enlisted) unless you took a step back and got an associated degree (which maybe only would require a class or two).

[@Achievement_Unlocked_]

@@evilload Depends on your goals. My goal was to retire from the military after I had been in for a little time. I got my degree while in but never commissioned because very, very few officers retire. It's very hard to retire as an officer and the military forces them out. Only a couple hundred versus thousands and thousands of enlisted SNCOs.

[@someguy5035]

You can't touch it until you are 60 though. What are you going to do for those additional 20 years?

[@Jodywithawhy]

You still get the pension which you’ll start collect upon retirement. Me myself, I’m already working my second career right now. That way when I retire in 5 years, I’ll be good to go. Plus I have some investments going on, so I’ll probably really retire about 50. But that’s me and a lot of people aren’t preparing themselves like I am, so they’ll probably have to work for another 20 years in another job, and then at 60 collect two retirements.

[@BrendonCarr]

WORK.

[@spearbun]

You start receiving the 1.9K/month as soon as you retire from service. It’s recommended to get a job on top of that obviously, but hard to argue with essentially 2K for no work at all… To clarify: you obvi have to put the work IN and get MSGT before year 20 but if you wanna play hard later you gotta work hard now

[@ZiiShihouin]

a few questions 1) I am in the process of joining the Air Force (24F). If i retire in 20 years at 44, will I get the pension immediately or is the pension only when im 60? 2) How does it work staying for 20 years? Like, do I have to be a certain rank to reach 20 years or will I be kicked from the military? For example, if I don't want to rank to E6 and E7, could i stay as E5 until retirement or will they kick me out?

[@marcialabrahantes3369]

#2: i think your assumptions are right - you just keep re enlisting so long as there's still a need for your job #1: there's another video for that but i think you can start getting the pension automatically but only if you're enlisted. if you went the reserve route only after 60

[@kdrage2544]

So will your pay stay the same after 12 years and after your salary is multiplied by 2.5% ?

[@Jodywithawhy]

You’re pay will increase as you make rank and the longer you’re in the Air Force. At 12 years, they give you that incentive to stay in longer with 2.5 multiplier. But that’s a one time check they give.

[@kdrage2544]

@@Jodywithawhy thanks

[@PrivateLLeo]

Thank you for you information, it answers many questions I had. Are you getting all that 1.7 million after you 60th birthday in once? Or they give them out as a payment plan? If so, how much can you get by monthly? Thank you!

[@Jodywithawhy]

If you do traditional TSP, you’ll get hit with a hefty tax if you do a lump sum withdrawal. You can also request to do installments where they pay once a month, once or quarter or however you specify. This will protect you from the hefty taxes, but you won’t get all your money at the same time. If you do a Roth TSP, the money you put in there is already taxed, so come withdrawal time, they can’t impose any other taxes on your money. You can check this link out to understand which one is right for you. www.investopedia.com/roth-tsp-vs-roth-ira-how-do-they-compare-4770656

[@PrivateLLeo]

@@Jodywithawhy I’m appreciated for your information!

[@BrendonCarr]

@@Jodywithawhy - The slow withdrawal plan is the way to go, because the balance remaining will continue to be invested, and will grow even as the balance is being depleted. My 82 year-old father reports his IRA now contains more assets than it did when he first started drawing it down.

[@muffemod]

10% return may be a bit ambitious.

[@Jodywithawhy]

Ambitious and optimistic we must be. 😬. Lol

[@johnanderson8046]

You are wrong to refer to the "Air Force Retirement System." The system applies equally to ALL branches of the military including USCG.

[@golfery5119]

That's not unusual for so many of these videos, that will refer to their branch but they mean the entire military (like seeing a video like "benefits of joining the army" and they tell you "you get free medical care" which is with the whole military and not just the army). It's less common to see a video refer to their branch and really mean unique to that branch instead of the military in general (JodywiththaWhy did have such a video "why the air force is the best branch" when he mentioned things like "shortest time in the dorms" aka barracks)

[@davidcwell1984]

20 years of service you get 50% not 40. And 2.5 for every year after 20 so 22 years would be 55% of your top 3

[@Jodywithawhy]

Of the legacy retirement. Not the blended retirement system which all new members are enrolled in.

[@CindyFontanez-jc6gc]

The Tsp is Guranteed to Gain interest? Or Can You Lose Money

[@Jodywithawhy]

It loses and gains money depending on the stock market. But over time it primarily gains. It’s the type of thing you put money into and forget about it. You don’t want to watch it constantly because it can be stressful.

[@Savage22223]

I wanna join

[@johnbeaman9570]

You are forgetting about inflation. That 1.7 million won't go as far as it would today

[@Jodywithawhy]

It won’t. Which is why I’m getting into real estate myself. Property ownership, in my opinion will bring more value than TSP. But if you have no idea where to start with investments, the TSP is a pretty solid plan.

[@user-up6qp9fv9w]

If a person can not live on 1.7 million in retirement then your are living way above your means. The first rule of planning for retirement is paying off you debt and not taking on more debt.

[@qmtcop]

Can you be a married woman in the air force?

[@Jodywithawhy]

Definitely