How to Calculate Military Reserve Retirement Pay

Like active duty military personnel, military reservists can retire from service after 20 years. Retirement pay is the same whether the reservist served in the Army, Navy, Marine Corps or Air Force Reserve. Unlike active duty personnel, who can begin drawing retirement pay immediately upon retirement, reservists must wait until they are 60 years old to begin drawing retirement pay. Ready Reserve members who have been recalled to service on active duty for periods of 90 days or longer since Jan. 28, 2008 have the age at which they can collect retirement pay reduced three months for every 90-day period of service.

Final Pay and High-36 Plans

Military reserve retirement pay is based on two main factors -- base pay and years of service. There are two different methods of determining base pay. The one used depends on when the reservist entered military service.

  • Final Pay Method. If you entered military service before Sept. 8, 1980, the base pay used to calculate your retirement is the base pay at the highest pay grade at which you served.
  • High-36 Method. All others use the total of their basic pay from the highest 36 months during their time of service to determine their base pay for retirement purposes. This will be considerably higher for reservists who spent longer periods of time on active duty.

Years of Service for Retirement Entitlement

You must have 20 years of service in the reserves to be eligible for reserve retirement. Furthermore, for a year to count, you must accumulate 50 service points in that year. You are awarded one point for every day you spent in active service during a given year, for each time you attended a drill period, and for each day in which you performed funeral honors duty. You are further awarded 15 points for each year you spent in your reserve component. Reservists who regularly attended their drill and training periods will not typically have any problem attaining the 50 points needed for a year to count.

Years of Service for Pay Base

Military retirement is based largely on a service member's years of service. For reservists, this is the sum of all years spent on active duty and the total number of days spent actively serving (i.e., on drill, during training or during any kind of call-up). One of the most unusual features of U.S. military reserve retirement is that a retired reservist continues to accumulate time in service as if he were on active duty from the time he retires from service until the time he collects retirement. This affects pay because the retired reservist will usually have considerably more time in grade when he collects retirement than he did when he retired from service.

Years of Service for Retired Pay Percentage Multiple

Determine your years of service for retired pay percentage multiple by multiplying the years of creditable service -- years of service for base pay -- by 2.5 percent. Once you've determined this amount, it's easy to calculate your reserve retirement pay:

  1. Look up the base pay for your pay grade and time of creditable service on the Department of Defense's current military pay scale. You will use the same pay scale that active duty service members use. Remember to use your years of service for pay base instead of the actual number of years you've been a member of the reserves.
  2. Multiply the base pay by your years of service for retired pay percentage multiplier. For example, if you have 24 years of creditable service when you are ready to draw retirement pay, you will multiply by 60 percent (24 x 2.5%=60%).

The Department of Defense maintains retirement pay calculators for reservists on its website.

Tip

Your retirement from the military reserves will not begin automatically. You must request retirement payments to begin from the department of the military branch in which you served. If you choose to wait longer to receive your retirement, your years of service for pay base will continue to accumulate.