Army officers who serve at least 20 years are eligible for military retirement pay. The amount is based on the Army officer's salary excluding special compensation such as combat or flight pay.
An Army major is classified as pay grade O-4. If he retired in 2015 after 20 years, he received 50 percent of his basic pay of $7,430.10, or $3,715.05 per month. At the other extreme, a 4-star general with pay grade O-10 and 40 years service got 100 percent of his basic pay of $19,762.50 per month. These are the initial retirement amounts. Retired Army officers also get annual cost-of-living adjustments.
Basis for Retirement Pay
Calculating exactly how much money a retired Army officer gets is a two step process. There are two ways to determine how to figure retirement pay.
- Final Pay. If an officer entered the service on or before September 8, 1980, the basis is the final rate of basic pay he received on active duty.
- High-36. The basis for officers who started at a later date is the average of the 36 months when they received the most money.
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Suppose an officer retirees with the rank of lieutenant colonel after 24 years of active duty service and the Final Pay basis applies. The basis in 2015 for this officer was $8,762.40.
Calculating Retirement Pay
To figure the monthly retirement pay, multiply years of service by 2.5 percent and then multiply the answer by the basis. For 24 years of service, this comes to 60 percent. If the officer's rank at retirement in 2015 was lieutenant colonel, you have 60 percent of $8,762.40. The monthly retirement pay equals $5,257.44.
Army officers who started on or after August 1, 1986 can select the REDUX option. The officer gets a $30,000 bonus after 15 years if he agrees to serve at least 20. When he retires, the monthly retirement amount is calculated using the High-36 method. However, until he is age 62, the pay amount is reduced by 1 percent for each year he retires before accumulating 30 years total service. REDUX is available only to active-duty personnel.
Reserve duty is a part-time career. Army officers who are reservists still qualify for retirement money after 20 years, but at a reduced rate. Points are awarded for each day of reserve duty. The total points are then divided by 360 to calculate how much time the officer has accumulated. Reservist time is added to active duty time and the total is used to calculate retirement pay.