How To Compute Military Retirement Pay

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

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.

Final Pay

Step 1

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

Step 2

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

Step 3

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

High 3

Step 1

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

Step 2

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

Step 3

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

Step 4

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

Step 5

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

CSB/REDUX

Step 1

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

Step 2

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 3

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

Step 4

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

Step 5

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

Tip

If you are a reservist, note that you cannot make more than 75 percent of your military salary in retirement—but active duty members have no restriction on how much they can make.

Things You'll Need

  • Calculator

  • Income information

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