Salary for Military Retirement
Retirement age in the military is a major drawing point for many would-be enlistees and officers. When you reach the years of service threshold for your branch of military service, retirement is an option no matter what your age. In addition, the option to retire carries with it a salary for retirement that you receive for the remainder of your life.
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Identification
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Each branch of the U.S. Military classifies your eligibility starting with years of service. The Air Force and Army both require a minimum of 20 years while the Navy and Marines require 30 years. Once you reach this threshold, your classification status is "retired." Although the amount you receive as salary for military retirement depends on a number of factors, your retirement package also includes benefits and, in some years, a cost of living salary increase.
Final Pay Method
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The formula for calculating your salary at retirement depends on years of service. A formula called the Final Pay method applies if you entered the military before September 8, 1980. The Final Pay method calculates retirement pay by multiplying your base pay at the time you retire by 2.5 for each whole year of service. According to Military.com, the maximum you can receive is 50 percent of your base pay if you serve 20 years, with a gradual increase to 100 percent of your base pay at 40 years of service \. For example, if you retire at 30 years with a base pay of $6,527, your retirement pay will be 75 percent of your base pay, or $4,895 per month.
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High 36 Method
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If you entered the military between September 8, 1980, and July 31, 1986, you can calculate your retirement salary using the High 36 method. This method works much the same as the Final Pay method. The only difference between the two is that instead of multiplying your base pay at the time you retire by 2.5 for each year of service, you first calculate an average for your three highest-paid years of service and then multiply this number by 2.5 for the year. As with the Final Pay method, the maximum you can receive is 50 percent of your average base pay at 20 years, gradually increasing to 100 percent at 40 years. For example, if you retire at 30 years with a base pay of $6,215 for two years and $6,527 your final year, your High 36 is $6,312 and your retirement pay will be 75 percent, or $4,734 per month.
Career Status Bonus/REDUX Method
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If you entered the military after July 31, 1986, when you complete 15 years of service, you can choose to receive a $30,000 bonus and calculate your retirement salary at a reduced rate, or waive the bonus and calculate your retirement using the High 36 formula. To use this method you first need to calculate your high 36 average and then multiple it by 2 percent each year for the first 20 years of service and 3.5 percent for each year over 20 years. The maximum you can receive using this method is 40 percent of your High 36 for 20 years of service, gradually increasing to 100 percent of your high 36 at 40 years of service. For example, if you retire at 20 years and your High 36 average is $6,319, your retirement salary will be 40 percent of your average, or $2,527 per month, or a reduction of $632 each month compared to using the High 36 method.
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