Once someone has served in the Coast Guard for 20 years, she is eligible for retirement. There are a number of benefits available to retirees, from free travel to cheap insurance to -- most important -- a pension that is calculated differently depending on when you joined the Coast Guard and which plan you choose to retire under.
Pension -- Final Pay
If you entered the Coast Guard prior to September 8, 1980, your pension will be calculated according to the Final Pay Retirement Plan. Under this program, you gain 2.5 percent of your last month's pay for every year of service.
So, someone who joined the Coast Guard in January, 1979 and retired in January, 2010 as a captain (O-6), would have made $10,247 in his or her last month of service. The captain served 31 years, so to calculate retirement pay we first multiply 31 by 2.5 percent = 77.5.
This means that the captain is going to earn 77.5 percent of $10,247 = $7,941.43 a month. This figure will be annually adjusted for the cost of living as the years go by.
Pension -- High 36
People who joined between September 8, 1980 and August 1, 1986 are under the High 36 Program. These men and women have their retirement calculated by the same multiplier, except that instead of the last month's pay it is taken as an average of the last 36 months' pay.
So if the same captain had joined in 1985 and still chose to retire at the end of 2010, he would have made $9,334.80 a month in 2008, and $9,577.20 a month in 2009 and 2010. The average of these 36 months' pay is $9,496 a month.
He would multiply 2.5 percent by 25 (the number of years he served), which is 62.5 percent. Thus, $9,496 x .625 = $5,935 a month, annually adjusted with the Consumer Price Index for inflation.
Pension -- Career Status Bonus (C.S.B.)
Finally, anyone who joined after August 1, 1986 has the option of the High 36 Plan or the C.S.B. plan. These people can choose between their last 36 months of service or their highest 36 months.
Usually, the last 36 months and the highest 36 months are the same amount, unless someone was promoted then demoted. It pays to check which pension scheme is more financially advantageous to you.
However, there is also a bonus for extended service. Rather than 2.5 percent multiplied by the number of years served, retirement is calculated as 2.5 percent per year for the first 20 years, then 3.5 percent for every year after that.
Finally, the C.S.B. program adjusts the cost of living differently -- instead of simply being tied to the C.P.I, it is the C.P.I. minus 1 percent.
Coast Guard retirees and their families can travel for free when there is space available on a military aircraft.
Coast Guard retirees are also eligible for subsidized or free health insurance, life insurance and car insurance.
- Photo Credit JenDen2005/iStock/Getty Images
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