How to Determine Military Retiree Pay
Any member of the military who completes 20 or more years of service can receive a pension. The military currently uses three systems to determine retirement pay, and the amount of pay you receive depends on a number of factors. These factors include length of service, the date you began active duty and the amount of your final pay or, in some cases, the average of your highest-grossing 36 months of pay.
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Instructions
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1
Determine the date at which you entered military service. If you entered before September 8, 1980, proceed to Step 2 to determine your "Final Pay." If you entered between September 8, 1980 and July 31, 1986, proceed to Step 3 to determine your "High 36" pay. If you entered on or after August 1, 1986, the military gives you the option of taking "High 36" pay or "CSB/Redux Retirement" pay, which is outlined in Step 5.
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2
Calculate your Final Pay. Multiply your years of active service by 2.5 percent, or .025. Now multiply that percentage by your monthly salary at the time of your retirement. This "Final Pay" is what you will receive per month as your retirement pay.
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3
Compute your High 36 retirement pay. Take the number of years active service and multiply by 2.5 percent.
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4
Determine your average basic pay for your three highest-earning years (36 months) of service. To calculate this number, add the basic pay for your 36 highest paid months of service, then divide that sum by 36. To calculate your retirement pay, multiply that number by the percentage you determined in Step 3. That is the amount you will receive each month under High 36.
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5
Determine your average basic pay for your three highest-earning years (36 months) of service to get your High 36 pay. Add your basic pay for the 36 highest-paid months of service, then divide by 36. To calculate your "CSB/Redux" retirement pay, proceed to Step 6.
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6
Total your number of years active service to get your final pay percentage. If you completed 20 years or less, multiply the number served by 2 percent and proceed to Step 7. If you completed more than 20 years, multiply the number of years served over 20 by 3.5 percent and add that number to 40 percent. So if you served 28 years of active service, your percentage would be 68%. Proceed to Step 7.
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7
Convert the percentage from Step 6 to a decimal. If your final pay percentage is 40 percent, that equals .40. Proceed to Step 8.
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8
Calculate your "CSB/Redux" retirement pay. Multiply the decimal from Step 7 by your High 36 (from Step 5). This amount is your monthly pension under CSB/Redux pay.
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Tips & Warnings
The Department of Defense makes yearly cost-of-living adjustments to retiree pay based on inflation in the Consumer Price Index. Even in a period of deflation (where the consumer price index drops), your retirement pay can never go down from year to year.
