Estimating Retirement Pay

How can I estimate my Reserve retired pay?

Reserve retirement is sometimes called non-regular retirement. Members who accumulate 20 or more years of qualifying service are eligible for reserve retirement when they reach age 60 or, in some cases, a lesser qualifying age. There are two non-disability retirement plans currently in effect for reserve qualified retirees. These are the Final Pay plan and the High-36 Month Average plan. There is no REDUX retirement plan under non-regular (reserve) retirement.

The basic retirement formula is:

Retired Pay Base X Multiplier %

There are three ways to compute reserve retirement, which is based on when you first entered military service (not just reserve service). If you have 20 qualifying years of service and your initial date of entry is:

♦ Before Sept. 8, 1980, divide the number of retirement points by 360. That gives you the years of service (in active-duty years). Multiply that by 0.025 (2.5 percent). Multiply that by the basic monthly active-duty pay for your grade and years of service on the retired-pay effective date (normally your 60th birthday). In other words, it is the rate of pay for the member's pay grade and years of service taken from the pay table in effect on the date that retired pay begins, regardless of when the member stopped participation (i.e. went into the gray area). Round that figure down to the nearest dollar to get the actual monthly retired pay. This is known as the Final Pay plan.

♦ On or after Sept. 8, 1980, divide the number of retirement points by 360 to get years of service in active-duty years. Multiply that figure by 0.025 (2.5 percent). Multiply that figure by the average of the 36 highest months of active-duty base pay for your rank. Round that figure down to the nearest dollar to get the actual monthly retired pay. Usually this will be the average of the 36 months for the member's pay grade and years of service taken from the pay tables in effect for the 36 months immediately preceding the date that retired pay begins, regardless of when the member stopped participation (i.e. went into the gray area). The High-36 retirement plan uses a multiplier % that is the same as the final pay plan. This formula is commonly known as the High-3 retirement plan.

♦ Members on active duty or full-time National Guard duty who entered service on or after Aug 1, 1986, and have completed 15 years or more of active federal military service, can choose either the High-3 retirement plan or Redux.

The Redux retirement system comes with a Career Status Bonus. The Redux portion determines monthly retirement income, and the Career Status Bonus provides a one-time $30,000 payment. Members can choose either High-3 or Redux no later than their 15th anniversary of active duty, using DD Form 2839.

Although Redux provides a $30,000 bonus, monthly retirement pay under this system is less than under the other two systems. For 20 years of service, members receive 40 percent of the average of their highest 36 months of basic pay, rather than 50 percent.

Also, unlike traditional retirement that provides full annual cost-of-living adjustments for inflation, COLA raises for Redux retirees are 1 percentage point less than inflation. There is a one-time “catch-up” COLA raise at age 62 that puts Redux retirement pay on par with traditional retirement pay, but after that, annual COLA adjustments under Redux again begin to lag inflation by 1 percentage point per year.

A member is generally not eligible for Reserve (non-regular) retired pay until they reach age 6o. However, any member of the Ready Reserve who is recalled to active duty or, in response to a national emergency, is called to certain active service after January 28, 2008, shall have the age 60 requirement reduced by 3 months for each cumulative period of 90 days so performed in any fiscal year after that date. The only stipulation is the member cannot retire before age 50.  Eligible personnel should understand and research their options before making a retirement decision.

For additional information, and pay calculators, you can check out the following links:

https://militarypay.defense.gov/Pay/Retirement/

https://militarypay.defense.gov/Pay/Retirement/Reserve.aspx