Editor PicksHow To Calculate Military Retirement Pay

How To Calculate Military Retirement Pay


How Are Fers Disability Retirement Benefits Calculated


Under the regular federal retirement benefit system, the basic annuity formula is based on age at retirement and years of service. If you retire under age 62 or at age 62 or older with less than 20 years of service, benefits are based on 1% of your high-3 average salary for each year of service. If you retire at age 62 or older with more than 20 years of service then benefits are based on 1.1% of your high-3 average salary for each year of service. However, the amount you can receive in federal disability retirement benefits can depend on your age and the years of service you have when you retire.

Here are some examples of how FERS disability benefits can be calculated.

Scenario #1: Youre age 62 or older at retirement and meet age and service requirements for voluntary retirement.

  • If youre 62 or older with less than 20 years of service you receive 1% of your high-3 average salary for each year of service
  • If youre 62 or older with 20 or more years of service you receive 1.1% of your high-3 average salary for each year of service

High-3 refers to the average of your salary for the three consecutive years where you earned the most. Typically, these are the final years of service but it can be any three consecutive years in which you had the highest earnings.

Scenario #2: Youre under age 62 at retirement and not eligible for immediate voluntary retirement

How Can I Avoid The Costs Of The Survivor Benefit Plan

The traditional approach to implement a survivor benefit plan 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 Survivor Liberty 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.

Soon Or Currently Retired Maximization

Once service members retire, there aren’t many options to maximize their military retirement pay because that amount is locked in based on service history. However, the TSP account is a portable retirement benefit. This means that when a service member leaves, they can have the TSP transfer part or all of their account into an IRA or another eligible employer plan account of a new employer) and continue to earn an annuity.

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Years Of Service For Retired Pay Percentage Multiple

Determine your years of service for retired pay percentage multiple by multiplying the years of creditable service — years of service for base pay — by 2.5 percent. Once you’ve determined this amount, it’s easy to calculate your reserve retirement pay:

  • Look up the base pay for your pay grade and time of creditable service on the Department of Defense’s current military pay scale. You will use the same pay scale that active duty service members use. Remember to use your years of service for pay base instead of the actual number of years you’ve been a member of the reserves.
  • Multiply the base pay by your years of service for retired pay percentage multiplier. For example, if you have 24 years of creditable service when you are ready to draw retirement pay, you will multiply by 60 percent .
  • The Department of Defense maintains retirement pay calculators for reservists on its website.


    Your retirement from the military reserves will not begin automatically. You must request retirement payments to begin from the department of the military branch in which you served. If you choose to wait longer to receive your retirement, your years of service for pay base will continue to accumulate.

    Final Pay Retirement System


    If you first entered the military before Sep. 7, 1980 you are eligible for the Final Pay Retirement system.

    Under this system your retired pay is computed by multiplying your final monthly base pay when you retire by 2.5% for every year of your service. That means you get 50% of your base pay if you retire with 20 years of service or 100% of your base pay if you retire after 40 years.

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    How To Calculate Military Retirement Pay Present Value The Right Way

    Lets assume that the E7 lives for 30 years beyond his military retirement, to the age of 70. That $30,000-a-year pension paid out annually over 30 years, including adjustments for inflation over the next 30 years, amounts to a total of $778,000 . This is the amount of money that the E7 would need to have RIGHT NOW, invested in an account thats earning at least 4% interest, in order to generate a $30,000 a year annuity.

    In the event that the E7 dies, his spouse will only receive 55% of that pension, or $16,500 a year . If the spouse receives SBP payments over a 30-year period, the value of those payments, again adjusted for inflation, is $531,000 . Thats significantly less than the true value of the pension over that 30-year period.

    Is it possible for the surviving spouse to realize the full value of E7 retirement pay through SBP payouts? Sure. The spouse would have to receive an SBP payment of $1,375/month for over 58 years in order to realize $778,000. But this situation is highly unlikely. To add insult to injury, that 6.5% SBP premium payment is pre-tax. The spouses has to pay taxes on the SBP payouts. This reduces even more how much the surviving spouse can expect to receive. It also makes it even less likely that she will ever see anywhere near the true value of the E7s military retirement pay via the SBP.

    What Are The Benefits Of Air Force Retirement

    Air Force Benefits Retirement. Those who serve in the military for at least twenty years are eligible for retirement from the Air Force. That is one of the earliest retirements around. All Airmen are also eligible for the Thrift Savings Plan . For every year of service the military member earns 2.5% towards his retirement.

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    Some Questions That Active Duty Military Families Also Ask

    How much do I make in the military?

    There are two easy way to determine your military pay. You can calculate your monthly pay by reading your leave and earnings statement or look at it annually using the Regular Military Compensation Calculator as shown in this video. It’s also important to consider how much your military retirement pension will be worth if you are serving a 20 year career.

    How does military pay compared to civilian pay?

    It’s a common mistake to compare military and civilian pay because it doesn’t take into account the plethora of social services that are associate with a military career. When compared directly, salaries often look better on the civilian side. However, that doesn’t count paid health and dental services, extra travel and PCS compensation, etc.

    How much does the military pay after 4 years?

    You can easily estimate the potential increases in military compensation by looking at the 2020 Military Pay Charts.

    Which military branch pays the most?

    Technically, the level of income services members are paid is determined by their rank and time in service and not by branch. However, some branches offer more financial opportunities than others in the form of access to schooling, permissive travel pay, and various hazard duty pays.

    Can you get rich in the military?

    How Much Is Military Retirement Pay

    How to calculate retirement pay

    As of 2020 Military Retirement Calculator projections an E7 retiring with exactly 20 years of service would receive $27,827 per year. Its important to note the present value of $838,551 for a 40 year old receiving this pension indefinitely.

    How is military retirement calculated? Your retirement benefit is determined by your years of service. Its calculated at 2.5% times your highest 36 months of basic pay. Thrift Savings Plan contributions are not matched by the government. How many years does it take to retire from the National Guard? 20 National Guard and Reserve servicemembers

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    What Military Related Benefits Are Eligible For Division

    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.

    Related: Military Divorce in California: Rights, Process, and Benefits

    Getting A Yearly Pay Raise

    Military retirees get an annual cost of living adjustment on the first December of each year equivalent to the inflation rate of the respective year. Inflation is based on the consumer price index . COLA helps military retirees sustain their purchasing abilities each year.

    If a member accepts the Career Status Bonus , their COLA is capped at one full percentage point beneath the rate of inflation.


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    Difference Between Frozen Benefit Rule & Coverture Formula

    The best way to illustrate the impact of the frozen benefit rule is with a hypothetical. Assume a soldier marries one year into his enlistment. Five years later, the couple obtain a decree of dissolution. By that time, the soldier is an Army Sergeant with 6 years of service, and there are 5 years of marriage overlapping the service.

  • Calculate Marital Percentage. First, we calculate the marital share as a percentage – that is 5 years of marriage divided by 6 years of service, or 83.33%. .
  • Calculate Hypothetical Retirement. While a soldier obviously cannot retire with just 6 years of service, we would need to calculate the hypothetical retirement of that servicemember. Assume that the E-5 had a High-3 pay of $2800/mo. And also assume that the members retirement benefits accrue at the rate of 2.5% per year . That means the hypothetical retirement amount comes to 6 x 2.5% x $2800, or $420/mo.
  • Calculate Spouses Share. The spouse receives one-half of the 83.33% marital share, or 41.67%. So her share comes to 0.4167 x $420, or $175/mo, plus COLAs. NOTE – this dollar amount is solely for planning purposes – the actual share should be expressed as a percentage to ensure the former spouse receives COLAs.
  • Multiply 8.9% x the $4760 retirement, and the former spouses share under the old system comes to $425/mo. Compare that to the $175/mo the former spouse receives under the frozen benefit rule, and the new rule cost the former spouse almost 60% of the pre-NDAA retirement.

    Calculate Your Retirement For Benefit Calculation

    Comparing E7 Retirement Pay: Active

    This is the easiest step. Just take 25% of the AMPE that you calculated in Step 4.

    The result of this step is the amount that your monthly CPP retirement pension will be, if your pension is starting the month after you turn 65.

    NOTE: For retirement pensions starting in 2019 or later and if the contributor has pensionable earnings in 2019 or subsequent years, this step will include additional calculations under the enhanced CPP changes. Watch this article for further details on these additional calculations in the near future.

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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.

    What Is The 20/20 Rule For Military

    In the simplest possible terms, the 20/20/20 rule refers to benefits that a divorced military spouse may be entitled to even though the spouse is no longer considered a dependent or mil spouse. 20/20/20 Benefit Requirements : 20 years married AND.

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    How Do I Calculate Fers Retirement

    A FERS disability retirement pay calculator works just as any other calculator does. You give the calculator a set of inputs and parameters, and the calculator gives you an answer.

    The output could be your annual payment .

    Or it could be your monthly or weekly payment. On the other hand, your output could be the total amount of money you will receive over X amount of time .

    It all depends on what you ask the calculator to give as its output. It is up to you.

    Many of the calculations depend on your high-3 salary. OPM defines your high-3 as the highest average basic pay you earned during any 3 consecutive years of service. Your basic pay is your basic salary paid for your position.

    This includes salary increases for which retirement deductions are withheld, such as shift rates. It does not include payments for overtime, bonuses, etc. Further, if ones total service was less than 3 years, the average salary is figured by averaging basic pay during all periods of creditable Federal service.

    The best way to find your high-3 average salary is to get a FERS benefit to estimate from your Agency. This report will show the official figures that will be sent to OPM.

    While the OPM website does not have a specific calculator webtool, they publish information on how they make the calculations .

    Here, we summarize those guidelines.

    Use An Ssdi Back Pay Calculator To Determine Your Benefits

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

    An SSDI back pay calculator can help you understand how you will be compensated for the time it takes for your Social Security Disability benefits claim to be approved.

    However, it is important to note that there are various types of back payments, and these will vary according to whether you apply for SSI or SSDI.

    At Crest SSD, we specialize in helping individuals win disability claims and be awarded the compensation you deserve. If you have questions about how this works, please complete this form or There are no upfront costs to work with us. We only receive a fee directly from the Social Security Administration if you win your case no out-of-pocket expense for you!

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    Choosing Whether To Waive Va Or Dod Benefits

    You can choose whether to waive your disability retirement pay from the military or your disability compensation benefits from the VA. Since disability compensation does not get taxed and retirement pay does, it often makes sense to waive the DOD pay and accept the VA compensation. But this is not true in all cases.

    Even if you waive your DOD pay, you and your dependents will still receive medical benefits from the DOD, as long as your disability has been rated at least 30%.

    Military Retirement Calculation When Already Retired At Divorce

    The calculation of military retirement if the member is already retired at the time of divorce is simple – Multiply the marital share against the disposable retired pay. And the marital share is this equation:

    Months of Marriage Overlapping Military Service———————————————————————-Total Months of Military Service at time of retirement

    Note that this coverture formula uses the total military service for the denominator, and the total retired pay for the multiplier, unlike the Frozen Benefit Rule which uses the military service through date of decree, but results in a lower calculation because it uses the smaller multiplier of the hypothetical military retired pay at the time of divorce.

    This equation is also used for a post-decree calculation when the decree of dissolution awarding retirement was issued prior to December 23, 2016, when the 2017 National Defense Authorization Act came into effect.

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    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.

    Converting Points To Year

    Army Reserve Retirement Points Chart 2020

    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.

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    Retirement From The Reserves

    According to the Department of Defense, members with 20 or more years of qualifying service are eligible for reserve retirement payments when they reach age 60. This applies to members who serve in the Coast Guard, National Guard and other reserve units.

    The formula is essentially the same for Guard and reserve members as it is for active duty members, except a point plan is used to configure equivalent part-time and full-time service.

    A reservist must accumulate at least 50 retirement points a year for it to count as a retirement qualifying year. There are various ways to earn points. For example, a reserve member receives one point for each day of active duty and 15 points for each year of reserve service.

    So, if a reservist completes one weekend per month of drill and two weeks per year of active duty training without absence, he or she can earn 62 points.

    Depending on when you joined the reserves, your retirement pay may be calculated using the Final Pay, High-36 or Blended Retirement System.

    Reserve members with more than 4,320 retirement points will remain under their current plan, while members with less than 4,320 retirement points as of Jan. 1, 2018, could choose to either opt in to the new Blended Retirement System or remain in their current plan. Those who enrolled in the reserves after Jan. 1, 2018, are automatically enrolled in the Blended Retirement System.

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