To Service members, military retirement is of great concern. But it is quite brain-racking to understand various plans then choose the right one. Are you troubled by this, too? We are here to help you get across the complex criteria and calculations. Check out! You will find the plan right for you by the end.

Let’s start with some basics about military retirement plans.

  1. Retired Pay Base

The retired pay base is determined with two methods: the final pay method and the high-36 month average method. Which one to apply depends on the date a member first entered military service or uniformed service. The date does not change, regardless of departing and rejoining.

  • The final pay method: the retired pay base equals final basic pay on the day of retirement.
  • The high-36 method: the retired pay base equals the average of the highest 36 months (3 years) of basic pay.

2. Multiplier

Each year of service is worth a certain percentage toward the retirement multiplier. The percentage differ from plan to plan. But whatever the plan is, the longer a member serves, the higher the multiplier. Therefore, the member will get more money in total.

3. COLA

It is referred to as an annual Cost of Living Adjustment which can protect military retirements from inflation. It changes with the Consumer Price Index (CPI), measured by the Department of Labor.

Now here’s a breakdown of 4 common plans.

(1). Final Pay Retirement System

  • Criteria to receive: Enlisted before Sep. 8, 1980
  • Retired Pay Base: Your final monthly base pay on the day of retirement
  • Multiplier: 2.5% for each year of service
  • Basic Calculation: Your retired pay = Retired Pay Base * 2.5% * Years of service

(For example, you retire with 10 years of service, you’ll get 25% of your final monthly base pay; you retire with 40 years, 100%. And so on.)

(2). High 36 Retirement System

  • Criteria to receive: Enlisted between Sep. 8, 1980 – Dec. 31, 2017
  • Retired Pay Base: the highest 36 months (3 years) of basic pay divided by 36
  • Multiplier: 2.5% for each year of service
  • Basic Calculation: Your retired pay = Retired Pay Base * 2.5% * Years of service

(For example, you retire with 10 years of service, you’ll get 25% of your average highest 36 months base pay; you retire with 40 years, 100%. And so on.)

(3). CSB/REDUX Retirement System

  • Criteria to receive: Enlisted between Aug. 1, 1986 – Dec. 31, 2017 (It’s an optional retirement plan for active duty members. You can also choose the High 36 system.)
  • Retired Pay Base: the highest 36 months (3 years) of basic pay divided by 36
  • Multiplier:

(a) Years of Service no less than 30 at retirement: 2.5% for each year of service

(b) Years of Service less than 30 at retirement: 2.5% for each year of service, minus 1% for each year that the member has less than 30. (For example, 20 years of service would equal a 40% multiplier.)

  • Basic Calculation:
  • Years of Service no less than 30 at retirement:

Your retired pay = Retired Pay Base * 2.5% * Years of service

  • Years of Service less than 30 at retirement (for example, 20):

Your retired pay = Retired Pay Base * 2.5% * 20 – Retired Pay Base * 1% * (30 – 20)

  • Bonus: You will be given an extra bonus of $30,000 before tax, if you served the military for 15 years or above.

(4). Blended Retirement System (BRS)

  • Criteria to receive: Enlisted after Jan. 1, 2018
  • Explanation: You can enjoy a 2% multiplier if you have no less than 20 years of service. And you can get a bonus at 12 years of 2.5% of your annual base pay.
  • Thrift Savings Plan: It is like a savings account. You will automatically contribute 3% of your pay to the it. But you can raise, lower, or stop TSP contributions if you want.
  • Lump-sum payment: When you retire, you can choose to get either a lump-sum payment or your full retirement. But the former choice may reduce your monthly pension until 67.

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