The minimum term of service for military retirement is 20 years. The only exceptions to this are granted for retirement due to a combat-related disability or because of a temporary incentive program for early retirement. Military retirement benefits include pensions, health care, access to VA loans and the ability to continue shopping at military commissaries.
Pensions before September 8, 1980
If you joined the military before September 8, 1980, your pension is determined by final pay. The Final Pay system pays you 50 percent of your last month of basic pay as your pension if you retire at the 20-year mark. Each additional year of service increases your percentage by 2.5 percent. Every year you will receive a cost of living adjustment based on the Consumer Price Index.
Pensions After September 8, 1980
If you signed up after September 8, 1980, you are eligible for The High 36 pension. This pays you 50 percent of your pay average during your highest-earning, 36-month period and increases the percentage by 2.5 percent for each year of additional service. You also receive an annual cost of living adjustment. If you joined after August of 1986, you can choose between the High 36 and the Career Status Bonus/REDUX retirement plan. This CSB/REDUX plan reduces your retirement at 20 years to 40 percent of your pay, but pays you a lump sum of $30,000. It reduces your cost of living adjustment by 1 percent based on the Consumer Price Index but raises your yearly increase for additional service to 3.5 percent. At age 62, your pension payment and cost of living adjustment will revert to the High 36 payment levels.
Concurrent Retirement and Disability Pay
As of 2004, military retirees are able to receive both military pension and disability pay. Previously, a pension was reduced by the amount of disability paid to a retiree. This new policy is known as Concurrent Retirement and Disability Pay (CRDP) and has been implemented in 10-percent-per-year increments since 2004. In 2014, a 100 percent payout will be reached and retirees can receive a full pension and disability. To qualify for CRDP, you must meet military retirement requirements and have a 50 percent or higher service-related disability rating from the Veteran's Administration (VA).
Retirees remain eligible for TRICARE, the Department of Defense's health care program. After retirement, you will have to pay an enrollment fee for the TRICARE Prime service compared to free enrollment as an active duty serviceman. When you become eligible for Medicare at age 65, TRICARE for Life can provide wraparound coverage. The TRICARE website breaks down all of the plans offered to retirees and active-duty personnel in detail to help you choose the plan best suited to the needs of you and your family.
Military retirees also retain access to key benefits enjoyed during active-duty service. Retirees can still access VA loans post-retirement. After you submit your retirement application listing a retirement date, the VA will temporarily waive the occupancy requirement for a home purchase to ensure you are able to move into your home immediately after retirement. You will also retain the right to shop at military post commissaries where you can pay cost for your groceries.