Simply put, the value of the retirement benefit depends on the life expectancy of the veteran. According to the Social Security Administration, a male retiree 45 years old will live for about another 32 years(http://www.ssa.gov/OACT/STATS/table4c6.html). If he retired from the military as an O-5 with 22 years of service, his retirement benefit would be $3686.50 before taxes an any deductions (including the survivor benefit plan).
So, what is the current value of an annuity that pays $3686.50 each month for 32 years? The problem is simplified because the monthly retirement amount is adjusted for inflation, unless the veteran selected the REDUX program. With the adjustments, you calculate the present value by multiplying the monthly benefit by the projected number of payments, in this case 384 monthly payments. When you do this math, you come up with the amount of money you'd need to put away to pay the benefit:
The military made this retiree a millionaire!
The enlisted retiree isn't that far behind. A retired E-7 with 22 years of service receives $1907.40 monthly. If he retired at age 40, he'll receive more than $844,000!
If you want to get an even better idea of what the value of a military retirement is, consider using the Vanguard Annuity Quote tool. Your retirement is a stream of guarenteed income just like an annuity.