Introduction

Military retirement pay is a highly valued benefit that compensates service members for their many years of dedication and sacrifices made throughout their military careers. It can be a complex process to calculate your military retirement pay accurately, as there are various factors that come into play, such as the type of retirement system you fall under, your years of service, rank, and base pay. In this article, we will break down the fundamentals of calculating military retirement pay to guide you through this important process.

Retirement Systems

There are three main retirement systems for military members that determine how your retirement pay is calculated:

1. Final Pay

2. High-3

3. Blended Retirement System (BRS)

Before diving into each system’s method of calculation, it’s crucial to know which one applies to you based on the year you entered the military service:

– Final Pay: Applicable if you joined before September 8th, 1980

– High-3: Applicable if you joined between September 8th, 1980, and December 31st, 2017

– Blended Retirement System (BRS): Applicable if you joined on or after January 1st, 2018 or opted-in

Calculating Retirement Pay for Each System

1. Final Pay

If you fall under the Final Pay retirement system, follow these steps:

Step 1: Determine your base pay at the time of your retirement.

Step 2: Calculate your years of creditable service. You can find this information on your Leave and Earnings Statement (LES) or ask your personnel office.

Step 3: Multiply your base pay by 0.025%. This will give you the percentage increase per year of service.

Step 4: Multiply the percentage obtained in Step 3 by your years of creditable service.

Step 5: Multiply the result from Step 4 by your base pay to get your retirement pay.

2. High-3

If you fall under the High-3 retirement system, follow these steps:

Step 1: Determine the average of your highest 36 months of base pay. Generally, this will be the last three years before retirement.

Step 2: Calculate your years of creditable service.

Step 3: Multiply your average base pay by 0.025% to find the percentage increase per year of service.

Step 4: Multiply the percentage obtained in Step 3 by your years of creditable service.

Step 5: Multiply the result from Step 4 by your highest 36-month average base pay to get your retirement pay.

3. Blended Retirement System (BRS)

If you fall under the BRS, follow these steps:

Step 1: Determine your highest 36 months of base pay.

Step 2: Calculate your years of creditable service.

Step 3: Multiply your average base pay by 0.02% to find the percentage increase per year of service.

Step 4: Multiply the percentage obtained in Step 3 by your years of creditable service.

Step 5: Multiply the result from Step 4 by your highest 36-month average base pay to get your retirement pay.

Note that under BRS, service members also receive contributions to their Thrift Savings Plan (TSP), making up a part of their overall retirement package.

Conclusion

Calculating military retirement pay may seem daunting at first, but understanding which retirement system you belong to and following our step-by-step guide will help simplify this process. Keep in mind that other factors may affect your retirement pay, such as disability ratings and survivor benefit programs, so it’s essential to consult with a finance professional.