Military retirement pay, in plain English.

Three retirement systems — which is yours?

1. Final Pay (entered before Sep 8, 1980)

Pension = 2.5% × years of service × final base pay. 20 years = 50% of final base pay; 30 years = 75% (max 75%).

2. High-3 (entered Sep 8, 1980 – Jul 31, 1986, or chose at 15-year mark)

Pension = 2.5% × years × average of highest 36 months base pay. Same percentage as Final Pay but averaged over the highest three years.

3. REDUX (Career Status Bonus / CSB-REDUX, Aug 1986 – Dec 2017)

Receive a $30,000 Career Status Bonus at year 15 + reduced pension formula (2% × years for first 20, 3.5% × years thereafter, plus age-62 catch-up). Most who chose REDUX regretted it; CSB ended in 2017.

4. Blended Retirement System (BRS) — entered Jan 1, 2018+

Combines a smaller pension with a TSP match:

• Pension: 2.0% × years × High-3 base pay (so 20 years = 40% instead of 50%)
• TSP: Auto-enroll, with DoD matching up to 5%
• Continuation Pay at year 12 (~2.5–13× monthly basic pay)
• Lump sum option at retirement: trade up to 50% of pension for cash; pension restores at age 67

BRS makes some retirement available even if you serve fewer than 20 years, via TSP. Pre-BRS systems give nothing if you separate before 20.

Reserves and Guard retirement

Reservists and Guard members earn retirement based on retirement points (one per drill, more for active duty). Need 20 "good" years, but pension begins at age 60 (or earlier for activations after 9/11/2008 — 90 days reduces age by 90 days, with limits).

Medical retirement

If you're medically retired with a DoD disability rating of 30%+, your pension is the higher of:

• Disability percentage × High-3 base pay (max 75%), OR
• Years × 2.5% × High-3 base pay (regular calculation if you have enough years)

Medical retirement also opens VA disability without a waiver if eligible for CRSC/CRDP. If your DoD or VA rating is too low, appeal.

VA disability and retirement — the offset rule

Pre-2003 retirees had to waive an equal amount of retirement pay to receive VA disability. Two programs now restore concurrent receipt:

• CRDP — full restoration for retirees with 20+ years and 50%+ VA rating
• CRSC — combat-related disabilities only, available at any rating including under 50%

You can switch annually between CRSC and CRDP based on which pays more. See full tax-benefits guide.

Survivor Benefit Plan (SBP) — irrevocable election

SBP is a pension-annuity insurance for your surviving spouse. Pays 55% of your retirement pay for life if you predecease. Premium is ~6.5% of retirement pay. Several rules:

• Default-enrolled at retirement; you must opt out actively (with spouse's notarized consent)
• Paid up at age 70 if you've paid 360+ months — no more premium, but spouse still gets the benefit
• If your spouse predeceases you, you can suspend
• If you remarry, you can re-elect SBP for the new spouse

TSP at retirement

Your Thrift Savings Plan stays with you when you separate. Options:

• Leave it in TSP — lowest fees, limited withdrawal flexibility
• Roll into a Traditional or Roth IRA — more options, possibly higher fees
• Cash out — taxes + 10% penalty if under 59½ (avoid except for true emergency)

If you rolled out and changed your mind, the TSP "rehire roll-in" lets you bring outside IRA money back into TSP.

Get help