# How to Calculate Retirement Pay With Both Active and Reserve Duty

People who serve in the U.S. military for 20 years or more, either as an active duty service member or a reservist, receive guaranteed retirement pay. As of 2011, this pay begins on the day the service member retires and is based upon the date you joined the service, your rank, the number of years served, and your pay on the day you retire.

## Step 1

Determine the date that you entered the military service. Those entering prior to September 8, 1980 use the Final Pay Retirement System. Those entering on or after September 8, 1980, but prior to August 1, 1986 are eligible for retirement pay under the High-3 system. Members who entered on or after August 1, 1986 and did not choose Career Status Bonus or REDUX retirement systems are also eligible under the High-3 system. All other service members that entered after this date receive retirement pay using the CSB or REDUX retirement system.

## Step 2

Compute your pay under the Final Pay system by taking the final basic pay for your last year of service and multiplying by 2.5 percent for each year of service. Therefore, at 20 years you receive 50 percent of your basic pay as retirement pay, and at 21 years you will receive 52.5 percent. Under this system you will receive 75 percent of your pay if you retire after 30 years of service, and 100 percent if you serve 40 years.

## Step 3

Determine your retirement pay under the High-3 system, also known as the High-36 system, by taking the three years in which you received your highest basic pay and averaging them. Then use the same formula as the Final Pay system to determine what your retirement benefits are. For example, if you served for 25 years and your three highest years of pay were \$55,000, \$60,000 and \$57,000, then your retirement benefits are \$35,833 per year.

## Step 4

Calculate your retirement pay under the CSB or REDUX system by averaging your three highest years of basic pay and multiplying this value by 2 percent for each year you serve, up to 20 years. After 20 years, each year of service is worth 3.5 percent. Therefore, at 20 years you are eligible to receive 40 percent of your basic pay during retirement, at 30 years you will receive 75 percent, and after 40 years you will receive 100 percent. The reason for this change is that the military offers a \$30,000 bonus to those who hit the 15-year mark as a service member.

## Step 1

Calculate the number of points for each year you serve, up to the maximum. The maximums are as follows and do not apply for years you serve as active duty: 60 points for years prior to September 23, 1996; 74 points for years between September 23, 1996 and October 30, 2000; and 90 points for all subsequent years. You receive 1 point for each day of active duty service, 15 points for each year you serve in a Reserve component, one point for each unit-training assembly, one point for each day you are in a funeral honors member status, and one point for every three credit hours of accredited correspondence courses completed.

## Step 2

Add up all of the points for each year and determine whether or not you have 20 qualifying years of service. A qualifying year is one in which you earn 50 or more points. If you have greater than 20 qualifying years, you are eligible to start receiving retirement benefits at the age of 60.

## Step 3

Determine whether you spent more than 90 consecutive days in a war or combat zone during 2008 or subsequent years. For each year that you did, you can reduce the age at which you are eligible to begin receiving benefits by one year.

## Step 4

Calculate your retirement pay if you entered the service prior to September 8, 1980 using the Final Pay retirement system. This means you receive 2.5 percent for each qualifying year of service, beginning at 20 years. Therefore, you are eligible to receive 50 percent of your basic pay for your final year of service at 20 years, and 75 percent at 30 years. Payment will not begin until you reach the age of 60, or a few years earlier if you qualified for a reduction.

## Step 5

Calculate your retirement pay using the High-3 retirement system if you entered the service after September 8, 1986. Instead of using your final year of basic pay, you will average your three highest paid years to determine how much you will receive.

### Tip

You can check your math using one of the many military retirement pay calculators that are available online.

### Warning

As of the time of publication, the U.S. government is discussing a complete overhaul of the retirement benefits for service members. This overhaul would change the current defined benefit plan to one that is a defined contribution plan. If this occurs, retirement benefits would depend on the contributions of the service member and his number of years of service.

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