Newer Military Members Retirement
There is a third retirement system for anyone who joined the military on or after August 1, 1986.
These individuals are required to make a decision at the 15-year point of their careers. They can elect to participate in the same retirement program above, or they can choose to receive an immediate monetary bonus , and select the “REDUX” system.
If they elect the “REDUX” system, the factor is determined by taking 2.5% times your years of service then reducing that factor by 1% point for each year less than 30 years. Using the same examples as above, a person with 22 years of active duty service would retire at 47% of the average of their highest 36 months of base pay. The “REDUX” ends at age 62, and the individual then begins to receive their “normal” retirement pay.
Additionally, folks who elect “REDUX” will have their annual cost of living allowance reduced by 1%. At age 62, those percentage points are added back to the retired pay, however.
How To Use The Tables To Find Your Monthly Payment
Find your basic rate
Go to the compensation rates for your disability rating. On the Basic monthly rates table, find the amount for your disability rating and dependent status. This is your basic monthly rate.
Example :If youre a Veteran with a 30% disability rating, and you have a dependent spouse , your basic monthly rate would be $522.39 each month.
Find your added amounts, if any apply
If your spouse receives Aid and Attendance benefits or you have more than one child, you may qualify for additional monthly payment amounts as listed in the Added amounts table.
First, determine your basic rate.
Example :If youre a Veteran with a 70% disability rating, and you have a spouse, plus 3 dependent children under the age of 18, you would start with the basic rate of $1,754.95 .
Next, look at the Added amounts table. Find the amount for children under age 18 .
Since your basic rate already provides payment for 1 child, you would add the rate of $64.00 for each additional child .
If your spouse receives Aid and Attendance, you would also add $119 .
In our example of a Veteran with 70% disability rating, your total monthly payment amount would be:
$1,754.95 basic rate + $64 +$64 +$119 Total $2,001.95
When To Expect The First Check
Members retiring from the National Guard and Reserves dont get their retirement pay instantaneously after retirement they get their first pay at the age of 60.
Under the 2008 National Defense Authorization Act, Congress scaled down the age for receipt of Guard/Reserve retired pay by three months for every 90 days of specified duty performed during any fiscal year after January 28, 2008. Retired pay eligibility age cant be shortened below the age of 50.
Specified duty includes active duty for deployment to a combat zone and recall to active duty in reply to a national emergency declared by the president or supported by federal funds.
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Converting Points To Year
To determine how much retired pay a member is eligible to get, calculate the number of equivalent years of service:
Total Number of Retirement Points ÷ 360
This formula determines the number of comparable years of service the member completed . Ten years of equivalent active-duty service amounts to 3,600 points.
Figuring payment is the same as for active-duty retirement pay:
Basic Pay × Number of Years Equivalent Active-Duty Service × 2.5%
Contingent on when a member joined the military determines whether a member is eligible for this amount or the smaller, averaged amount.
When Do Military Members Get Paid
Military paydays are on the first and 15th of the month unless it is a holiday or weekend. Paydays that would normally fall on one of those days are paid on the preceding business day. Here are the current military pay schedules:
| 6,143.16 | 6,143.16 |
General Officer Pay Limits: Basic pay is limited to the rate of basic pay for level II of the executive schedule in effect during the calendar year 2023 for officers at pay grades O-7 through O-10. This includes officers serving as chairman or vice-chairman of the Joint Chiefs of Staff, chief of staff of the Army, chief of naval operations, chief of staff of the Air Force, commandant of the Marine Corps, commandant of the Coast Guard, chief of the National Guard Bureau or commander of a unified or specified combatant command ).
Pay limits for O-6: Basic pay for O-6 and below is limited by level V of the executive schedule in effect during calendar year 2023.
Combat zone tax-exclusion pay for officers: The combat zone tax exclusion for O-1 and above is based on the basic pay rate shown in note 3 plus hostile fire or imminent danger pay, which is $225.00 per month .
Academy cadets and ROTC basic pay: Basic pay rate for academy cadets/midshipmen and ROTC members and applicants is $1,218.
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Disability Retired Pay: Treatment Under Internal Revenue Code Of 1986
That part of the retired pay of a member of an armed force, computed under formula No. 1 or 2 of section 1401, or under section 1402 or 1402a of this title on the basis of years of service, which exceeds the retired pay that he would receive if it were computed on the basis of percentage of disability is not considered as a pension, annuity, or similar allowance for personal injury, or sickness, resulting from active service in the armed forces, under section 104 of the Internal Revenue Code of 1986.
Editorial Notes
References in Text
The Internal Revenue Code of 1986, referred to in text, is set out in Title 26, Internal Revenue Code.
Amendments
1987 Pub. L. 10026 substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954” in section catchline and text.
1980 substituted “the Internal Revenue Code of 1954” for “title 26” in section catchline and text.
Pub. L. 96342 section 1402a of this title .
Statutory Notes and Related Subsidiaries
Effective Date of 1980 Amendment
Amendment by effective Dec. 12, 1980, see section 701 of Pub. L. 96513, set out as a note under section 101 of this title .
Military Retiree Pay Options
They can be confusing for military retirees and service members counting their retirement points. What if you could look at one simple online calculator and be able to see your military retirement pay for any rank or number of years served before deciding whether it’s worth staying in the military? Like all things in the military, there are several factors that contribute to determining your retirement pay.
Retirement pay is determined by multiplying your average base pay for each year of service times 2.5 percent. That’s multiplied again by the number of years you’ve served over 20 years. However, most people have seen their military pay decrease year after year due to the pay caps imposed by Congress for military personnel. You also have to be aware of how long you’ve served plus any other time in service that could affect your final number.
The government has a few legacy military retirement pay programs. The choices of which one to choose will depend on when you enter military service. Veterans in active service after 1986 have enrolled in the Final Pay Retirement Pay System or High 36 Retirement Pay System. Those whose registration was made after 1 January 2019 will be eligible for the Blended Retirement System.
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Retirement Pay For E7 With 20 Years
For all the non-commission officers who have been in for a while and are planning on retiring soon, it’s important to understand how much retired pay you’ll be entitled to.
Its common knowledge that many entered service not only collect a basic pay and housing allowance, but also to complete 20 years or service to earn retirement benefits.
The retirement system calculator is a tool that can help you estimate your monthly retirement benefits when you retire from service. However, there are many other factors that will affect your final earnings including: the number of years served, rank, time in service and whether or not you’re married.
For retired military personnel to get an accurate calculation of what your monthly pay might look like before you make any decisions about leaving the military watch this video to calculate your retired pay after active service.
If you are an E7, chances are you have been thinking about your retired pay for when you retire. But what do the numbers really mean?
This tool can help you determine if it’s best for you to retire now, wait until later, or postpone your decision altogether. You can also use this calculator as a tool to estimate how much money will be lost in benefits by electing early active duty retirement pay versus delaying that election until later in your career when more years have been added onto your service time.
-> Click the Photo to Access the Calculator < –
With A Dependent Spouse Or Parent But No Children
Find the dependent status in the left column that best describes you. Then look for your disability rating in the top row. Your basic monthly rate is where your dependent status and disability rating meet.
If your spouse receives Aid and Attendance benefits, be sure to also look at the Added amounts table, and add it to your amount from the Basic monthly rates table.
Basic monthly rates for 30% to 60% disability rating| Dependent status | 30% disability rating | 40% disability rating | 50% disability rating | 60% disability rating | ||||
|---|---|---|---|---|---|---|---|---|
| Dependent status | 30% disability rating | 467.39 | 40% disability rating | 673.28 | 50% disability rating | 958.44 | 60% disability rating | 1,214.03 |
| With spouse | 30% disability rating | 522.39 | 40% disability rating | 747.28 | 50% disability rating | 1,050.44 | 60% disability rating | 1,325.03 |
| With spouse and 1 parent | 30% disability rating | 566.39 | 40% disability rating | 806.28 | 50% disability rating | 1,124.44 | 60% disability rating | 1,414.03 |
| With spouse and 2 parents | 30% disability rating | 610.39 | 40% disability rating | 865.28 | 50% disability rating | 1,198.44 | 60% disability rating | 1,503.03 |
| With 1 parent | 30% disability rating | 511.39 | 40% disability rating | 732.28 | 50% disability rating | 1,032.44 | 60% disability rating | 1,303.03 |
| With 2 parents | 30% disability rating | 555.39 | 40% disability rating | 791.28 | 50% disability rating | 1,106.44 | 60% disability rating | 1,392.03 |
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How To Use The Final Pay Military Retirement Calculator
Service members who entered the armed forces before Sept. 8, 1980, and are still serving can use the Final Pay Calculator to estimate their future military pension amount. Service members who joined the service after Sept. 8, 1980 use the High-3 calculator.
Of all the retirement plans, the Final Pay system uses the simplest formula. Youll receive 2.5% of your final monthly basic pay for every year of service. For example, if you retire after 40 years of active service, then you can expect to receive 100% of your monthly base pay as your retirement pension.
For the Final Pay calculator, youll enter all the same information that the other service members did for the High-3 calculator.
You can also reset the calculators results by adjusting the factors. For example, delaying your retirement year may result in a higher base pay due to automatic cost-of-living adjustments, even if you dont get a promotion. This would increase your retirement pay.
If you joined after 2018, use the Blended Retirement System calculators for active duty or those in the National Guard or reserves.
Remember, the sooner you start planning for your transition to retirement, the more money youll have to spend when you get there.
Prior Enlisted Officer Pay Qualifications
Prior enlisted officers may be eligible for a higher pay rate based on time in service and other criteria. The pay scale offers the following note:
*Applicable to O-1 to O-3 with at least four years and one day of active duty or more than 1,460 points as a warrant and/or enlisted member. See Department of Defense Financial Management Regulations for a more-detailed explanation on who is eligible for this special basic pay rate.
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Formulas For Computing Retirement Pay
Several factors determine your military retirement pay. The following formulas should help you understand how your military retirement pay is calculated.
Members Eligible For Retired Pay Who Are Also Eligible For Veterans’ Disability Compensation For Disabilities Rated 50 Percent Or Higher: Concurrent Payment Of Retired Pay And Veterans’ Disability Compensation
Payment of Both Retired Pay and Compensation.
In general .Subject to subsection , a member or former member of the uniformed services who is entitled for any month to retired pay and who is also entitled for that month to veterans’ disability compensation for a qualifying service-connected disability is entitled to be paid both for that month without regard to sections 5304 and 5305 of title 38 . During the period beginning on January 1, 2004, and ending on December 31, 2013, payment of retired pay to such a qualified retiree is subject to subsection , except that payment of retired pay is subject to subsection only during the period beginning on January 1, 2004, and ending on December 31, 2004, in the case of the following:
A qualified retiree receiving veterans’ disability compensation for a disability rated as 100 percent.
A qualified retiree receiving veterans’ disability compensation at the rate payable for a 100 percent disability by reason of a determination of individual unemployability.
Qualifying service-connected disability .In this section, the term “qualifying service-connected disability” means a service-connected disability or combination of service-connected disabilities that is rated as not less than 50 percent disabling by the Secretary of Veterans Affairs.
Calendar year 2004 .For a month during 2004, the amount of retired pay payable to a qualified retiree is the amount of retired pay in excess of the current baseline offset plus the following:
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Are Widows Of Veterans Eligible For Benefits
It depends on if the veteran selected the survivor benefit plan . If so, the surviving spouse would receive 55% of the pension paid monthly for the remainder of his/her life. The SBP does have a 6.5% pension cost in order to participate. Therefore, a retiring E7 could expect to pay almost $80,000 of retirement pay to cover SBP costs over the 30 year enrollment period.
The average E7 would receive $2683/mo pre SBP. Post enrollment, death benefits will only be about $1,000 per month. This is because the survivor benefit plan offsets SDB costs over time.
Who Is A Retired Military Member
For Navy and Marine Corps members, you are considered to be a “retired member” for classification purposes if you are an enlisted member with over 30 years of service, or a warrant or commissioned officer.
Enlisted Navy and Marine Corps members with less than 30 years of service are transferred to the Fleet Reserve/Fleet Marine Corps Reserve and their pay is referred to as “retainer pay”.
Air Force and Army members with over 20 years of service are all classified as retired and receive retired pay.
When a Navy or Marine Corps member completes 30 years, including time on the retired rolls in receipt of retainer pay, the Fleet Reserve status is changed to retired status, and they begin receiving retired pay. The law treats retired pay and retainer pay exactly the same way.
Military retirement pay is unlike civilian retirement pay systems. You either qualify for retirement by honorably serving over 20 years in the military, or you do not.
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How Can I Avoid The Costs Of The Survivor Benefit Plan
The traditional approach to implement a SBP alternative was to purchase a low cost term insurance policy. After years of research, we discovered that this approach can backfire because only 2-3% of term insurance policies are ever paid. The other alternative is usually whole life insurance that is sold at a high cost without enough coverage.
These are the problems that we realized no one else was solving when we created the Spouse Benefit Plan. The most modern alternative to the expensive Government Insurance programs. You can learn more about how to avoid the costs of SBP and VGLI here.
Although the retirement system calculator can give you a general idea of your monthly benefits, it’s important to speak with a life insurance consultant to get a more accurate estimate. That’s why we offer free consultations to military retirees. We want to make sure you have all the information you need to make the best decision for your family. If you’re ready to retire soon, don’t wait another day! Schedule your consultation today.
