Retired Pay (2024)

In most cases, Soldiers who have completed 20 years of active service are eligible to receive Retired Pay at the end of their career. The Date of Initial Entry into Military Service (DIEMS) determines which of the three retirement systems a Soldier falls under. Retired Pay amount and requirements depend on whether a Soldier qualifies for active duty retired pay or non-regular retired pay (Reserve Component).

In general, Retired Soldiers who have accumulated 20 years of active service are eligible for Retired Pay.

There are three methods for computing non-disability Retired Pay depending on the Soldier's DIEMS. The highlights of these three retirement plans follow:Retired Pay (1)

Final Pay Plan: For Soldiers who entered military service prior to September 8, 1980 retired pay is computed using 50% of basic pay after 20 years of service plus an additional 2.5% for each additional year. For example, a Soldier who retires with 24 years of service (YOS) will receive retired pay equivalent to 60% of final basic pay (50% +10% (2.5% x 4 years)). Final Pay Plan also includes a Cost-of-Living Adjustment (COLA) - usually annually.

High-36 Plan: For Soldiers who entered military service between September 8, 1980, and July 31, 1986, retired pay is computed using 50% of the average of the "high-36" (36 months) of basic pay after 20 years of service, plus an additional 2.5% for each additional year. The example for a "high-36" participant with 24 years of service will be the same as the Final Pay Plan (50% +10% (2.5% x 4 years), however, the multiplier (60%) is applied to the average basic pay for the highest 36 months rather than the final basic pay. As with the Final Pay Plan, the High-36 Plan includes a Cost-of-Living Adjustment (COLA) - usually annually.

Career Status Bonus (CSB)/REDUX: Soldiers who entered military service on or after August 1, 1986 have a choice of two retirement options: (1) retire under the "high-36" plan described above, or (2) retire under the provisions of the Military Retirement Reform Act (MRRA), commonly known as REDUX, and receive a $30,000 Career Status Bonus (CSB) after 15 years of service with an agreement to complete 20 years of service. This retirement system is completely voluntary.

For Soldiers who elect the REDUX option, retired pay is computed using 40% of the "high-36" average basic pay after 20 years of service, with an additional 3.5% for each additional year. The example for an CSB/REDUX participant with 24 years of service will be a retirement pay equal to 54% of the "high-36" average basic pay (40% + 14% (3.5% x 4 years)). As with the other two retired pay plans, this plan includes a Cost-of-Living Adjustment (COLA) - usually paid annually - however, COLA is 1 percentage point less than the normal full Consumer Price Index (CPI) increase applied to regular retired pay programs.

A feature unique to CSB/REDUX is an adjustment to the retired pay computation when a Soldier reaches age 62. The first adjustment "resets" the multiplier to what it would have been under the "high-36" plan on date of retirement (60% in the example used), and the second adjustment applies the full CPI for every retirement year to compute a new base retirement salary. Future COLAs will still be at COLA minus 1%.

Note: In accordance with Section 631 of P.L. 114-92, Section 354 of Title 37, U.S.C., was amended to discontinue authorization of any new payments of the Career Status Bonus (CSB/REDUX) as of January 1, 2018. No new CSB agreement may be entered into after December 31, 2017, and, accordingly, no Service member may elect a reduction in that Service member's retirement multiplier (i.e., convert to the REDUX retirement plan) as a consequence of electing a CSB after such date. An agreement to elect a reduced retirement multiplier in exchange for a CSB made on or prior to December 31, 2017, remains in effect. Payments pursuant to a CSB agreement entered into on or before December 31, 2017, may continue to be made on or after January 1, 2018. Letters to notify currently-serving active duty members of their eligibility to make a CSB election was discontinued as of July 1, 2017.

Blended Retirement System: The National Defense Authorization Act (NDAA) for Fiscal Year 2016, Public Law 114-92, enacted 25 November 2015, created a new retirement system for the Uniformed Services. This new retirement system will apply to all Service members who enter the Uniformed Services with a Date of Initial ERetired Pay (2)ntry into Military Service (DIEMS) of 1 January 2018 or later. Referred to as the "Blended Retirement System," this new system is a combination of a defined benefit plan, similar to predecessor plans that pay monthly retired pay, plus contributions to the Federal Thrift Savings Plan (TSP).

The Blended Retirement System (BRS) combines elements of the legacy retirement system with benefits similar to those offered in many private-sector 401(k) plans. The following are the key features of the Blended Retirement System (BRS):

  • Defined Benefit: Monthly retired pay for life after at least 20 years of service (so if you retire at 20 years of service, you will get 40% of your highest 36 months of base pay). Retired pay will be calculated as follows: (Years of creditable service x 2.0%) x average of highest 36 months basic pay.

  • Defined Contribution: Government automatic and matching contributions of up to 5% of basic pay to your Thrift Savings Plan (TSP) account.

  • Continuation Pay: A one-time, midcareer bonus in exchange for an agreement to perform additional obligated service.

  • Lump Sum: An option to receive a discounted portion of your monthly retired pay as a lump sum distribution at retirement (25% or 50%).

Prior to retirement ensure DFAS Retired and Annuitant Pay has a good email address for you in myPay, not the us.army.mil since that will go away upon retirement. Use myPay to check and make changes to your pay account to include Retiree Account Statement (RAS) which includes the monthly and yearly RAS, Combat Related Special Compensation (CRSC), Pay Changes to include Allotments, Beneficiaries and Direct Deposit, Tax information to include Federal Withholding, State Withholding, and End of Year Retiree Tax Statement (1099R).

Access the MyArmyBenefits calculator to calculate your retirement pay:
https://myarmybenefits.us.army.mil/Benefit-Calculators/Retirement

For more detailed information on retirement pay, please visit Army Retirement Services Office (RSO) at:
https://soldierforlife.army.mil/retirement/rso

Army Human Resources Command web site:
https://www.hrc.army.mil/

Defense Finance and Accounting Service site at:
https://www.dfas.mil

Blended Retirement System:
https://militarypay.defense.gov/BlendedRetirement/

Access the MyArmyBenefits Blended Retirement Calculator:
https://myarmybenefits.us.army.mil/Benefit-Calculators/BRS-Comparison-Calculator

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

Gray Area (National Guard and Reserve) Retirees Now Have a New Avenue to Stay Connected: A New Kind of myPay Account:
https://www.dfas.mil/RetiredMilitary/newsevents/newsletter/Gray-Area-Retirees-New-Avenue-to-Stay-Connected/

Retired Pay (2024)

FAQs

How much income is enough in retirement? ›

Some strategies call for having 10 to 12 times your final working year's salary or specific multiples of your annual income that increase as you age. Consider when you want to retire, goals, annual salary, expected annual raises, inflation, investment portfolio performance and potential healthcare expenses.

What is the number one mistake retirees make? ›

Similar to the price of gas, we cannot predict future market returns; therefore, one of the biggest mistakes retirees make is failing to plan for the combination of market volatility and withdrawing money from their investment accounts, also known as sequence of returns risk.

How do I ensure I have enough money for retirement? ›

One well-known method is the 80% rule. This rule of thumb suggests that you'll have to ensure you have 80% of your pre-retirement income per year in retirement. This percentage is based on the fact that some major expenses drop after you retire, like commuting and retirement-plan contributions.

How much money do you need to retire with $100,000 a year income? ›

So, if you're aiming for $100,000 a year in retirement and also receiving Social Security checks, you'd need to have this amount in your portfolio: age 62: $2.1 million. age 67: $1.9 million. age 70: $1.8 million.

What is a good average monthly income in retirement? ›

The average retirement income for U.S. adults 65 and older is $75,020. The median income for that age group is $50,290, according to data from the Census Bureau and Bureau of Labor Statistics. On a monthly basis, the average income for U.S. adults 65 and older is $6,252. The median monthly income is $4,191.

How long will $400,000 last in retirement? ›

Safe Withdrawal Rate

Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.

What is the biggest regret in retirement? ›

Some of the biggest retirement regrets include: A vague financial plan. No retirement goals. Counting on long-term employment.

What percentage of retirees have no savings? ›

Nearly 2 in 5 Retirees Have No Retirement Savings

The survey found that about 37% of retirees say they have no retirement savings, up from 30% in 2022, and only about 12% have at least the recommended $555,000 in savings.

How much do most retirees have? ›

What is the average and median retirement savings? The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances.

What happens if you have no retirement savings? ›

You can still live a fulfilling life as a retiree with little to no savings. It just may look different than you originally planned. With a little pre-planning, relying on Social Security income and making lifestyle modifications—you may be able to meet your retirement needs.

Can a retired couple live on $50,000 a year? ›

$50,000 per year is considered a moderate income in the United States, and many individuals and families manage to live comfortably on this income.

What is the average 401k balance for a 65 year old? ›

$232,710

How long will 100k last in retirement? ›

Bottom Line. With $100,000 you should budget for a retirement income of around $5,000 to $8,000 on top of Social Security, depending on how you have invested your money. Much more than this will likely cause you to run out of money within 25 – 30 years, which is potentially within the lifespan of the average retiree.

Is $10,000 a month a good retirement income? ›

In a world in which the average monthly Social Security benefit is just over $1,792, it may seem like a pipe dream to live off $10,000 per month in retirement. But the truth is that with some preparation, dedication and resolve, many Americans can reach this impressive level of retirement income.

Can a retired couple live on $60,000 a year? ›

Assuming you want to withdraw 4% of your retirement assets each year, to be able to live off of $60,000 a year, you would need to have $1.5 million in retirement savings. This means you would need to put away $3,125 a month for 40 years – assuming, again, that you didn't actually invest it.

Can you retire $1.5 million comfortably? ›

Retiring in comfort at 45 with $1.5 million is likely doable as long as your retirement living expenses are no more than average, your investments generate a typical return and you have good health. Challenges include waiting 17 years for Social Security and 20 years for Medicare.

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