Military Vs. Civilian Retirement


Military retirement differs from traditional civilian retirement because of the way funds are earned and distributed. Technically, military retirement is paid under the agreement that the retired service member may be called into action at any point in time; therefore, the retiree is paid a fraction of his active duty base pay for the remainder of his life. Oftentimes, service members are young enough to begin a second career after retiring from the military and may earn dual retirement income.

Traditional Retirement

  • Non-military retirement consists of an account into which you deposit funds that earn interest over time. Some companies agree to match your deposits into your retirement account. In most cases, you may withdraw funds from your retirement account without penalties at the age of 59 and a half. That money may be taxed initially or upon distribution depending on the type of retirement account you choose. However, once the money in the retirement account runs out, no additional funding is available.

Military Retirement

  • Unlike a civilian pension, military retirement doesn't consist of funds that have accumulated in an account over time. Instead, it's a reduced rate of pay that the retired service member receives until he dies. Military retirement is calculated on a points-based system. For each year served in the military, the service member earns a certain number of points. By the 20 year mark, the service member will have enough points to get paid half of his base pay for the remainder of his life. If a service member stays on past 20 years, he earns more points. After 30 years, a service member may have enough points to earn 75 percent of his base pay in retirement.

Government Civilian Retirement

  • Those who go on to a civilian career in the federal government or civil service must decide between two retirement options. The first choice is to combine military and civilian careers into a single civilian retirement, which means the retiree must forfeit the military pay. The second choice is to receive the civilian retirement funds and military retirement pay separately. Every retiree's situation is different, so it's important to calculate the pay depending on the specific retiree's military and civilian careers.


  • Spouses of divorced military service members may be entitled to up to 50 percent of the retirement earned by the service member during the course of their marriage, under the Uniformed Services Former Spouses' Protection Act (USFSPA). The amount is calculated based on the number of points the spouse earned over the legal duration of the marriage. Traditional retirement accounts are generally divided based on the amount in the account when the divorce occurs.

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