How To Compute Military Retirement Pay

Due to recent changes in retirement options, the military now offers an especially desirable retirement pay program. Your date of entry into service determines which of the three non-disability retirement plans applies to you. If you entered the military before Sept. 8, 1980, your pay will be calculated under the Final Pay plan. If you entered after Sept. 8, 1980, your pay will be calculated under High 3. If you entered after Aug. 1, 1986, and served on active duty, you have the unique option of choosing the Career Status Bonus (CSB) REDUX plan. Calculate military retirement by hand or use the U.S. Department of Defense's calculator in the "Resources" section.

If you worked a civilian job in addition to the military, you may qualify for Social Security benefits too.

Final Pay

Step

Add up your active-duty and credited reserve points and divide this number by 360 to find your qualifying years of work.

Step

Multiply years of work by 2.5 percent to obtain your "retirement multiplier."

Step

Multiply your monthly income at the end of service by your retirement multiplier to find your monthly retirement pay.

High 3

Step

Add up your active-duty and credited reserve points and divide this number by 360 to find your qualifying years of work.

Step

Multiply years of work by 2.5 percent to find your "retirement multiplier."

Step

Add your income from each month during your highest-paid three years of service.

Step

Divide by 36 (representing 36 months, or three years) to find your average basic pay.

Step

Multiply average basic pay by your retirement multiplier. This is your monthly retirement pay.

CSB/REDUX

Step

Add all active duty points and divide by 360 to find your qualifying years of work.

Step

Multiply years of work, up to 20, by 2 percent. This is your retirement multiplier if you've served on active duty for 20 years or less. For each year after 20, multiply by 3.5 percent to find your retirement multiplier.

Step

Add all income over your highest paid three years of service (not including bonuses in this sum).

Step

Divide this number by 36 to find your average basic pay.

Step

Multiply your average basic pay by your retirement multiplier to find your monthly retirement pay.