How To Calculate Reserve Retirement


How To Qualify For Retirement From The Guard Or Reserves


In general, you need to serve 20 years to be eligible for military retirement benefits. This is true for those who serve on active duty, or in the National Guard or Reserves. Members of the Guard and Reserves need 20 Good years, or Satisfactory years to qualify for military retirement. A Good Year is defined as earning 50 or more points in a year. We will cover earning points in just a moment.

Exceptions to the 20-year rule: There are some situations when you may be eligible to retire a little early. One example is the Temporary Early Retirement Authority, or TERA, which is often used during periods of Force Shaping and Reductions in Force . Under TERA, some servicemembers are eligible to retire with as few as 15 years of active duty service. However, they also receive a smaller pension, both based on years served, and because there is a multiplier used that decreases the final pension calculation. Other exceptions for early retirement can be made for medical reasons, or under some other limitations. But in general, we are working with the assumption that it takes 20 or more years of service to be eligible for military retirement.

Guard And Reserve Retirement

Reserve Components also need 20 years of military service, but calculating years of service differs in active-duty. In this case, its 20 years of good service and can be any combination of service between the Guard and Reserve. Reservists have a different system of doing this than the National Guard. We will examine the separate Guard and Reserve retirement systems, and what is meant by good service below.

Guard and Reserve members are free to retire when they are eligible, but unlike active duty retirement, Guard and Reserve members can not receive their military pay until age 60.

Military Retirement: An Overview

For those serving on active duty, retirement is possible once 20 qualifying years of military service have been reached.

There are some cases where early retirement is possible with fewer than 20 years of service, but military early retirement is not an open-ended option. You may only be permitted to opt-into early retirement when the Department of Defense authorizes early-out programs.

These programs are often run to help the various branches of military service meet end-strength goals. In times when the DoD needs to cut the number of troops currently serving, early-out retirement options are often made available to facilitate those goals.

Active duty military members may also medically retire before 20 years of service, depending on the circumstances, but this is not an option the service member chooses. A military medical review board makes the decision at the discretion of the government.

Definition Of Terms

For this article, you will find the term Reserve Component used to describe members of both the Reserve and National Guard.

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Translating Service Into Income

Guard and Reserve retired pay normally begins at age 60. However, it can begin three months early for each 90 days of qualifying active service performed during a fiscal year. Only service performed after Jan. 28, 2008 qualifies. Depending on the date you entered the service, youre covered by one of two plans: Final Pay or High 36. If the tables below make your head spin, check out the Armys Retired Pay Application to calculate your retirement pay estimate.

Date You Entered Service
Final months basic pay times 2.5% for each year of service
High 36 Average pay of the Highest 36 months Basic Pay times 2.5% for each year of service

Under either system, theres a financial benefit to transferring to the Retired Reserve rather than merely being discharged since youll earn longevity credit for the time you spend in the Retired Reserve. Being discharged creates an even more dramatic benefit reduction under the High 36 program: In addition to the loss of longevity credit, benefits for discharged service members are calculated using the pay table in effect during the year of discharge rather than at age 60. For example, if you elected to be discharged after qualifying for retirement pay at age 42, that could mean missing out on nearly 20 pay increases!

Of course, money is only one consideration. Retired Reserve status carries the continuing possibility of being called to duty and the decision is irrevocable.

Department Of Defense Reserve Retirement Calculator

Comparing E7 Retirement Pay: Active

Trick question: there isnt one. This link explains the DoD Reserve retirement system, and it tells you what data to enter into your smartphone or your spreadsheet, but theres no DoD Reserve retirement calculator. I dont know why, but perhaps DoD has delegated Reserve retirement calculators to the respective services so that each service can use their common access card data behind a secure website login. That way a servicemember has to log in with their CAC, verify their personal data and let the website access the details of their record for a more accurate estimate.

Of course, if youre retired awaiting pay or youve been in the Inactive Ready Reserve for a few years, you may be wondering what the heck a CAC is. My personal advice is that you avoid the CAC system until they hunt you down and make you get one. In the meantime, you can use your smartphone or your spreadsheet and enjoy your life.

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Navy Reserve Retirement Calculator

The Navy started the Dude, wheres my calculator? movement a year ago, but Im a little slow to catch on. In early 2012 they took their calculator off their public site and moved it behind their firewall to require a CAC login.

This only helps if you have a CAC , but it makes the calculator more accurate for those who do. The site can access your precise point count and check for any unusual dates or deployments that may make you eligible for an earlier retirement.

Another option is the Association of the U.S. Navy. If youre a member of this military advocate group, then you can log on to their website calculator. Even better, you can e-mail their staff for help reviewing your service record, auditing your point count, and checking for special situations or other issues. Their monthly magazine, their tax guide, and their other website tools are well worth the membership fee.

Unless you have a CAC card, a Navy Knowledge Online account, or an AUSN membership, Id use the Army Reserve retirement calculator above.

Calculating A National Guard Or Reserve Pension

Guard and Reserve pensions are calculated slightly differently than active duty pensions. Active duty pensions are calculated by multiplying the total years of service by a multiplier of 2.5% . Then you multiply that by your pay base. In the High-3 pension plan, your pay base is the average of your highest 3 years of pay .

Guard and Reserve pensions are calculated in a similar manner, but there is an intermediate step that must be completed before you can calculate the final pension. We must first convert Points into years served. To do this, add up all your Points, then divide by 360. This gives you the total number of years served .

So take your total number of days served, and divide by 360, then multiply that by 2.5%. Here is a quick example: Say you have 3,150 points. Divide that by 360, then multiply by 2.5%. You get * 2.5% = 21.875%. Now multiply that by your pay base .

Get a More Precise Estimate of Your Pension: Every service has an online retirement calculator that allows you to put in very granular information, including your Date of Initial Entry Into Military Service , your estimated retirement date, and other factors. Its important to note that these calculators are often password protected and you need to login to your branch website get this information.

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Retire Awaiting Pay Or Resign

There are two ways to retire, and they require you to consider a certain amount of risk. The first option is to retire awaiting pay. Over 99.99% of Reserve/Guard retirees choose this option. When you retire awaiting pay youre not required to perform any duties or maintain any readiness in the gray area between the time you retire and the start of your retired pay, but the risk of this option is that you could still be recalled to duty for a full mobilization.

A full mobilization requires the President and Congress to declare a war thats bad enough to require the entire armed forces, and its more severe than the Presidential mobilization that was declared after 9/11.

Most Reserve/Guard retirees are willing to take this risk because the Department of Defense pays for it. If you retire awaiting pay then your seniority within your rank continues to accumulate, and when you reach your pension start date then your retirement pay will be drawn at the active-duty pay table in effect that year. In other words, DoD covers you on both seniority and inflation.

You may also want to read the: Reserve Non-Regular Retirement Information Guide

If youre not willing to accept the risk of a full mobilization, then the only way to completely avoid it is to resign. Youll still receive your pension at your start date but itll be at the seniority you had in that rank when you resigned and in the pay scale in effect when you resigned.

The Service Percent Multiplier

Calculating Retirement Pay in the National Guard – Retirement PT.3

If you had retired under the active-duty system with Final Pay or High Three, your multiplier would have been 2.5% per year of service. For 20 years of service, this is the 50% of base pay that youve seen so much in the media.

The Reserve/Guard retirement system calculates the multiplier from your total points.

Divide your grand total career point count by 360 and multiply by 2.5% to come up with your service multiplier.

For example, 2134 points / 360 * 2.5% = 14.82%. Thats your service percent multiplier, just as an active-duty retirement at 20 years would be 50%.

For those who are in the BRS, the multiplier is 2.0%.

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Earning Additional Points Through Service

Guard and Reserve members earn additional Points through their annual participation. Participation is broken down into Active Service and Inactive Service. Examples of the types of service include:

  • Active Service Active Duty , Active Duty for Training , and Annual Training
  • Inactive Duty Service Inactive Duty Training , membership, and Non-residential correspondence courses.

Active Service Members on Active Service are paid active duty rates and benefits and earn one Point for each calendar day they serve in one of these categories. Additional retirement Points cannot be awarded for other activities while in an active duty status.

Active Service includes Active Duty , Active Duty for Training , and Annual Training . AD and ADT days are self-explanatory. This is when the Reserve member is called to active duty, including being mobilized, deploying, training, etc. AT days are the annual two-week training requirement, or the two weeks a year. Servicemembers earn 1 Retirement Point per day while in these statuses.

Inactive Duty Service Members on Inactive Duty Service can be in a paid or unpaid status, depending on their type of service. The number of Points they earn can also vary depending on the type of service they are performing.

Points Breakdown:

  • 1 Point for each day on Active Service
  • 1 Point per Drill Period .
  • 1 Point for serving in an Honor Guard for Funeral Honors Duty .
  • 1 Point for each three study hours of qualifying military correspondence courses.

How To Calculate Military Retirement Pay In A Divorce For Active Members

For ex-spouses, the maximum amount of pension income that they can receive is 50% of their military retirement pay. If the ex-spouse already received their pension, the direct payments will start after 90 days.

Generally, the calculation of the pension amount depends on the length of the marriage or the number of points accumulated. The amount of money received by the ex-spouse usually correlates to how long they were married to the military member during their service. It is rare for a spouse to get 50% of the military retirement pay unless they were married to the military member for their entire time of service.

The three methods used to determine the amount of payment are:

  • Net Present Value: this is more common for those who want buyouts upfront
  • Deferred Distribution: the amount shared is calculated at the time of divorce, but the receipt of funds is delayed
  • Reserve Jurisdiction: this is the most common method, where the share amount is calculated at the time of divorce

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Determine If You’re Eligible To Draw Retirement Pay

Unlike active-duty sailors, Navy Reserve retirees cannot draw their retirement pay until they are 60 years old. Those who have been called to active service during their time in the Reserve any time after Jan. 28, 2008, may subtract three months from the age at which they can retire for each continuous 90-day period they spent in active service. During the time between your retirement from service and the time you begin to draw retirement pay, you continue to accumulate years of service for base pay as if you were on active duty. In most cases, this means that you will retire with considerably more time in your pay grade than you actually served actively or in the Reserve.

What Military Related Benefits Are Eligible For Division

Comparing E7 Retirement Pay: Active

The law only allows the division of disposable military pay, which includes the full military pension. For example, VA disability compensation is not included in the military pension. Also, if a servicemember receives combat pay, they are not entitled to any special compensation.

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How To Calculate Military Retirement Pay In A Divorce For Retired Members

The calculation of military retirement pay for already retired members is much simpler to figure out. One must multiply the marital share against the disposable retired pay. In order to calculate the marital share, a spouse must divide the months of marriage overlapping military service by the total months of military service at the time of retirement.

Earning Annual Participation Points

15 retirement points are awarded to Guard and Reserve members for each year of service. This includes times spent as a drilling participant or while serving in the Inactive Ready Reserve .

A drilling participant is a member of a Reserve component who regularly serves a minimum of one weekend per month and approximately 14 days a year during annual training . While their IRR counterparts, serve in an inactive status after completion of active duty or electing to transfer into the component.

Thanks to Reservist and CFP Jeff Clark for researching the history of participation points. Its discussed on page 164 of the 11th Quadrennial Review of Military Compensation. Its the inset box which includes the text Unfortunately, no documentation was available to explain the purpose or rationale for the 15 membership points. However

You accumulate points for drill weekends, active duty periods, and under some special circumstances:

  • completion of online or correspondence courses
  • serving on funeral honors detail
  • providing support to recruiting personnel

Each day of active duty counts as one point. Each drill counts as one point , as do the days of active duty in the Reserve/Guard for training or mobilizations.

Youre also limited by the number of points you can get in a category you cant do 52 drill weekends in one year and get points for every one.

Of course, you can certainly be mobilized during a leap year and receive 366 points of active duty.

  • Annual Participation 15

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Example: Final Pay Plan

If you entered R.O.T.C. at age 18 in 1979 and served 30 years in the Navy Reserve, retiring in 2009 as a Captain , when you turn 60 years old in 2021, you will be eligible to draw your retirement pay. You will use the Final Pay Plan because you entered service before 1980. Assuming you attended drills regularly, you have 30 years of countable service. If you spent two years deployed to the Persian Gulf in 2008 and 2009 and spent an average of 40 days per year in active service the other years, you determine your years of service for base pay by adding the two years of your deployment to the 1,120 days and the years spent in the gray area — 12 if you retire in 2021 at age 60. This gives you a total of 17 years of service for base pay. Your final pay was $8,822.40 based on the current pay scale. Your retired pay percentage multiplier is 42.5 percent . Your retirement pay is $8,822.40 x 42.5 percent, or $3,749.52.

Dont Forget Your Other Military Retirement Benefits

How Do I Use The Military Retirement Calculator

Estimating your retired military pay is a great way to prepare for your future. But its also important to consider how your other military retirement benefits will impact you, both financially, and in your quality of life. You will still have access to military installations, shopping, and other base amenities.

Perhaps the most valuable benefit, however, is access to military health care in your retirement years. Health care is becoming more expensive and less accessible. Your military retirement benefits will help you gain access to more affordable health care. This article covers your health care options after leaving the military. This is great information for anyone leaving active duty, or the Guard or Reserve components.

This article covers health care for retired Reservists and Guard members. Your TRICARE wont kick in until age 60, at which time you will be eligible for TRICARE Prime or Standard. When you reach age 65, you will be eligible for TRICARE for Life. In between, there are other options, including unsubsidized access to TRICARE Reserve Select. You will also be eligible to obtain health coverage through an employer or through a private exchange.

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