Retirement pay calculator - Military Retirement - Navy Times

Retirement pay calculator

Military members receive retirement pay under one of three pay systems: “Final pay,” “High-3” or “Career Status Bonus/Redux.” The rates of retired pay depend on your years of service before retirement and vary from system to system.

How the three systems work:

Final pay

Open to those who entered service before Sept. 8, 1980. Those who retire at the 20 year mark receive half their final basic pay. For each year of service beyond 20, the retirement check is increased by 2.5 percent of basic pay, up to a maximum of 100 percent of basic pay for 40 years of service.

High-3

Open to those who entered service on or after Sept. 8, 1980 but before Aug. 1, 1986. The retired pay rate is determined by the average pay rate during the three years when an individual’s pay was highest during his or her military career. That average is multiplied by 2.5 percent for each year in uniform to determine retirement pay. Thus, for 20 years of service, the High-3 formula offers retirement pay equal to 50 percent of average basic pay over the member’s three highest earning years in uniform; 75 percent of average basic pay over the three highest earning years for 30 years of service, and 100 percent of average basic pay over the three highest earning years for 40 years of service.

Career Status Bonus/Redux

Those who entered military service after Aug. 1, 1986, can choose to receive retirement pay under the High-3 system or can choose the CSB/Redux option. Under the Redux plan, a service member at 14 years and 6 months of service who agrees to remain in uniform at least five more years may elect to receive a $30,000 bonus, either as a lump sum or in annual installments, at the 15th year of service. But retired pay for 20 years of service is lower — only 40 percent of average base pay over their three highest earning years in uniform. The legal formula for computing retired pay for 20 to 30 years of service for Redux retirees is 2.5 percentage points for each year of service, reduced by 1 percentage point for each year of service short of 30 years. For example, a service member under Redux with 20 years of service would multiply 20 by 2.5, then subtract ten (ten years short of 30 years of service), which yields 40. Thus, retired pay for a Redux member with 20 years of service would be 40 percent of average basic pay over their three highest earning years in uniform. Similarly, Redux members with 25 years of service would multiply 25 by 2.5, then subtract five (five years short of 30 years of service); their retired pay would be 57.5 percent of their average basic pay over their three highest earning years. Redux members with 30 years of service would simply multiply 30 by 2.5, which yields 75 percent of average basic pay over the three highest earning years in uniform. After 30 years of service, however, the formula for Redux members changes — they get a straight 2.5 percentage points for each year of service beyond 30. As such, retired pay for Redux members with 40 years of service would be 100 percent of their average basic pay over their three highest earning years in uniform. Annual cost-of-living adjustments also are one percentage point lower than under the High-3 retirement system. A one-time “catch-up” adjustment is made at age 62 that brings the value of retired pay under Redux back in line with the Final Pay and High-3 systems; after that, however, annual cost-of-living adjustments under Redux again begin to lag the other two systems by one percentage point each year.

Calculators

The Office of the Under Secretary of Defense for Personnel and Readiness offers retirement calculators on its military compensation Web page. Available calculators include: Final Pay, High-3, CSB/Redux and a retirement choice calculator that compares High-3 and CSB/Redux.

http://www.dod.mil/militarypay/retirement/calc/index.html