Members of the Navy Reserve can retire after 20 countable years. Calculating Reserve retirement pay is not quite as straightforward as calculating retirement pay for sailors who retire from active duty, but the actual math is simple, and it isn't overly complicated to calculate Navy Reserve retirement once you understand the elements that go into it.
The toughest part of calculating Navy Reserve retirement pay is understanding the difference between the three similar "years of service" terms: retirement entitlement, base pay and retired pay percentage.
Step 1: Determine If You Are Eligible for Retirement
Your 20 countable years of service may be a combination of years on active duty and in the Reserve. For a year in the Navy Reserve to be countable, you must have accumulated 50 service points that year. Service points are accumulated as follows:
- 1 point for each day spent actively serving.
- 1 point for every day spent on funeral honors duty.
- 1 point each time you attended drill.
- 15 points for each year you spent in the Navy Reserve unit.
Step 2: Determine If You're Eligible to Draw Retirement Pay
Unlike active-duty sailors, Navy Reserve retirees cannot draw their retirement pay until they are 60 years old. Those who have been called to active service during their time in the Reserve any time after Jan. 28, 2008, may subtract three months from the age at which they can retire for each continuous 90-day period they spent in active service. During the time between your retirement from service and the time you begin to draw retirement pay, you continue to accumulate years of service for base pay as if you were on active duty. In most cases, this means that you will retire with considerably more time in your pay grade than you actually served actively or in the Reserve.
Step 3: Determine Whether to Use the High-36 or Final Pay Plan
If you entered military service -- including entering an R.O.T.C. program or the Naval Academy -- before Sept. 8, 1980, you use the Final Pay Plan. This plan uses your highest pay grade to determine your base pay for retirement.
All others use the High-36 Plan, which uses the average of your highest 36 months of base pay. For most, this will be your final three years of service, though this can vary if you spent considerable amounts of time on active duty.
Step 4: Calculate Your Years of Service for Base Pay
Add all years you spent on active duty, the number of days you've spent in active service while in the Navy Reserve (for example, when you were called up to active service, called up for an emergency and your drill and training periods), and the time that you've spent in the "gray area" between retiring from Reserve service and collecting your Reserve pay.
Step 5: Calculate Your Years of Service for Retired Pay Percentage Multiplier
The percentage multiplier for your years of service for retired pay is 2.5 percent times the number of years of service for base pay. A Navy Reserve retiree with 20 years of creditable service has a 50 percent retired pay percentage multiplier. If you have 30 years of service, that multiplier becomes 75 percent.
Step 6: Calculate Your Retirement Pay
Multiply your base pay from the High-36 or Final Pay options by your retired pay percentage multiplier to calculate your retirement pay.
Example: Final Pay Plan
If you entered R.O.T.C. at age 18 in 1979 and served 30 years in the Navy Reserve, retiring in 2009 as a Captain (O-6), when you turn 60 years old in 2021, you will be eligible to draw your retirement pay. You will use the Final Pay Plan because you entered service before 1980. Assuming you attended drills regularly, you have 30 years of countable service. If you spent two years deployed to the Persian Gulf in 2008 and 2009 and spent an average of 40 days per year in active service (1,120 days total) the other years, you determine your years of service for base pay by adding the two years of your deployment to the 1,120 days (three years) and the years spent in the gray area -- 12 if you retire in 2021 at age 60. This gives you a total of 17 years of service for base pay. Your final pay was $8,822.40 based on the current pay scale. Your retired pay percentage multiplier is 42.5 percent (17 years x 2.5 percent). Your retirement pay is $8,822.40 x 42.5 percent, or $3,749.52.
Example: High-36 Plan
If you enlisted in the Navy Reserve as a 20-year-old in 1990, attended all your drills and retired from Reserve service in 2010 as a Chief Petty Officer (E-7) with one year at that rank and two years as an E-6, you can begin to draw retirement pay at age 60 in 2030. You would use the High-36 method to determine your base pay from your highest paid 36 months. Assuming an average of 40 days active service per year and no deployments, you had a little over 2 years (800 days) of active service. Add the 20 years you will spend in the grey area, and you have 22 years of service for base pay. Your retired pay percentage multiplier is 55 percent (22 years x 2.5 percent). You determine your retirement pay by obtaining the average of your highest 36 months of base pay and multiplying it by 55 percent.