How much is military retirement pay?

If you recently retired from the military, you may want to know how much you will receive in retirement pay and how the benefit is computed. The military has various retirement systems for determining retirement pay.

The amount you receive in military retirement pay depends on the length of service and rank at the time of retirement. If you are eligible for the final pay retirement system, your retirement pay will be 2.5% of your basic pay for every year of service. However, if you are eligible for the high-36 retirement system, your retirement pay will be the average of your 36 highest-earning months of basic pay times 2.5% for every year of service. Other methods of determining retirement pay include disability, REDUX, and the blended retirement system.

Military retirement plans

The amount you receive from a military retirement plan depends on the year when you started military service. If you retired due to a disability, you may decide to have your retirement pay calculated based on your disability or length of service.

Here are various ways how military pay is calculated:

Final Pay

If you started military service before September 8, 1980, you are eligible for the final pay retirement system. Your retirement pay will be calculated by multiplying your final basic pay by 2.5% for every year of active duty or reserve service.

For example, if you served in the military for 20 years, your retirement pay will be 50% (2.5% x 20) of your final basic pay. If you served for 30 years, your retirement pay will be 75% (2.5% x 30) of your final basic pay.

High 36

The High-36 retirement system is available to service members who began active duty or reserve service after September 8, 1980, and July 31, 1986. If you are eligible, your retirement pay is calculated by taking the average of the three highest 36 months of basic pay.

REDUX

If you started military service after August 1986, your retirement pay is calculated under the REDUX system. You can also elect to use the High-36 retirement system. On your 15 anniversary of military service, you will receive a Career Status Bonus (CSB) of $30,000, and your retirement pay will reduce by 40% of the average of the highest 36 months of basic pay. If you have served in the military for at least 30 years, your retirement pay will not be subject to the pay reduction.

Blended Retirement System

If you joined military service after January 1, 2018, you may be eligible for the blended retirement system. You will receive 40% of your basic pay after 20 years of military service, and a bonus on your 12anniversary.

Additionally, the military automatically contributes 1% of your salary to a Thrift Savings Plan. The military matches up to 5% of your salary each year, and you can elect to contribute more than the 1% automatic contribution. Once you retire or leave military service, you can rollover the Thrift Savings to an IRA.

Disability

If you are medically found unfit to continue serving in the military due to a disability, you will be eligible to receive disability pay. You must have at least a 30% disability score, which is based on your years of service or percentage of disability. The retirement pay is calculated based on your highest 36 months of pay or final basic pay.

How much is the Average military pay?

Once you retire from the military, your retirement pay will be based on your retirement plan and military status. Generally, you can expect to receive 2.5% of the final basic pay for every year of military service.

If you retire after 20 years in the military, your retirement pay will be equal to 50% of your final basic pay, while service members who complete 40 years of service can expect to receive 100% of their final basic pay as retirement pay.

If you retired as an enlisted service member with 20 years of service, you could receive an average military pay of $30,000 to 35,000 per year while a service member who retired as a typical officer could receive an average of $60,000 to $70,000 per year.

Does military retirement pay affect social security benefits?

Once you retire from the military, you will receive both military retirement pay and social security. The amount you receive as social security income is not based on your military retirement pay, but your previous earnings.

However, the military retirement pay may affect the amount you receive as supplemental security income (SSI). SSI is a federal benefit for low-income people, and you will only be eligible to receive this benefit if your overall income is below the limit set by the Social Security Administration. The military retirement pay counts towards your overall income, and if it pushes your income beyond the set limit, you won't be eligible for SSI.