Any Marine sergeant who serves 20 years in active duty or as a reservist with 20 years of service who is at least 60 years old qualifies to receive a military pension from the Department of Defense. Because Marine sergeants reach the maximum salary for their pay grade — $2,965 monthly after 12 years in the Corps as of 2011 — all sergeants who qualify for retirement from the Corps receive the same pension, although pension amounts vary based upon when a Marine joined and which retirement formula he chooses.
High-3 Retirement Plan
All active-duty Marines who enlisted after September 8, 1980, may choose to retire using the High-3 retirement plan. The Department of Defense uses average of the three years of the Marine's basic pay with the highest salaries as the pension's basis, paying them 50 percent of this average. For each year of service beyond the 20-year mark, a retiree receives an additional 2.5 percent of his base pay, with a maximum pension equivalent of 100 percent of his final pension. For example, a Marine sergeant who retires after 20 years in the Corps receives $1,482.50 monthly as of 2011 — 50 percent of $2,965 — while a sergeant with a 30-year career receives $2,223.75 monthly, or 75 percent — 50 percent plus 2.5 per extra year of service — of his base pay.
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Career Status Bonus/Redux Plan
Marines who enlisted after August 1, 1986, may choose to receive a pension based on the High-3 formula or take the Career Status Bonus/Redux plan. Marines who choose the career status bonus receive a $30,000 signing bonus at the start of their 15th year of service, and commit to serving for at least 20 years. Because of the bonus, when a Marine who chose this pension option retires, he receives 40 percent of his three highest year's salaries as his base pension. For every year beyond 20 he serves, his pension increases by 2.5 percent. However, Marines on this plan who retire before 30 years of service see their service increment decrease by 1 percent for each year less than 30 years they serve. For example, a Marine who retires after 25 years of service receives a base pension of $1,186 monthly, plus an additional 2.5 percent – (2.5 x 5 additional years of service) – (1 x 5 years short of 30 years service) for a total monthly pension of $1,260.
A reservist at least 60 years old with more than 20 years of service may retire as a sergeant, and draw a limited pension. Reservists divide their total number of reserve points by 360 to convert it to full-time enlistment equivalency. The sergeant should multiply this number by 2.5 to determine the percentage of sergeant pay as a monthly pension if she chooses the High-3 plan. Those who opt for the Redux plan should convert their full-time equivalency and apply the Redux formula based upon her active-duty base pay.
Cost of Living Increases
The Department of Defense doesn't freeze the pension of a sergeant who retires from the Corps when he separates from duty. Each year, the department provides cost of living adjustments to military pensions. These cost of living adjustments are typically around three percent each year, but vary depending on economic conditions.