Retirement Pay Information

Retired Pay Base

There are two methods for determining the retired pay base. They are the final pay method and the high-36 month average method. The high-36 method is the average of the highest 36 months of basic pay divided by 36. This is generally the last 3 years of service and is sometimes called high-3. The method used depends upon when the member first entered military service.

To decide which method applies to you, you must determine the date that you FIRST entered the military. This date is called the DIEMS (Date of Initial Entry into Military Service) or DIEUS (Date of Initial Entry to Uniformed Services). The date you first entered the military is the first time you enlisted or joined the active or reserves. This date is fixed—it does not change. Departing the military and rejoining does not affect your DIEMS.

Some individuals have unique circumstances that complicate determining their DIEMS. Here are a few examples:

• The DIEMS for Academy graduates who entered the Academy with no prior service is the date they reported to the Academy, not the date they graduated.
• Beginning an ROTC scholarship program or enlisting as a Reserve in the Senior ROTC program sets the DIEMS, not the graduation or commissioning date.
• Members who entered the military, separated, and then rejoined the military have a DIEMS based on entering the first period of military service.
• The DIEMS for members who enlisted under the delayed entry program is when they entered the delayed entry program, not when they initially reported for duty.
• For those who joined the Reserves and later joined the active component, their DIEMS is the date they joined the Reserves.

Be aware that your pay date may be different than your DIEMS. Also, your DIEMS does not determine when you have enough time in the service to retire—it only determines which retired pay base method applies to you.

Not all Services have their DIEMS dates properly defined in their personnel records. If you have unusual circumstances and are unsure of when your DIEMS date is or believe your records show an incorrect DIEMS date, contact your personnel office to discuss your particular situation.

Now, based upon the date you initially entered the military, you can determine which retired pay base method applies to you.

Retired Pay Multiplier

For both the Final Pay and High-36 retired pay plans each year of service is worth 2.5% towards the retirement multiplier. For instance, 20 years of service would equate to a 50% multiplier. The years of service creditable are computed differently depending upon whether retirement is from full time active duty or from a reserve career. These differences are explained under the Active Duty Retirement and Reserve Retirement pages.

For the REDUX retirement plan, which applies only to an active duty retirement, the High-36 multiplier is reduced by one percentage point for each year that the member has less than 30 years of service at retirement. For instance, 20 years of service would equate to a 40% multiplier. This is discussed more fully under the Active Duty Retirement page.

For the Disability retirement plan, the multiplier may be the higher of 2.5% for each year of service or the disability percentage assigned by the Service at retirement. However, note that the disability retirement multiplier is capped at 75%.

All military retirements are protected from inflation by annual Cost of Living Adjustments (COLAs), based on changes in the Consumer Price Index (CPI) as measured by the Department of Labor. Under the Final Pay and High-36 retirement plans, the annual COLA is equal to the percentage increase in the CPI year over year. This is a different index than the one used for active duty annual pay raises. The index used for active duty pay raises are based upon average civilian wage increases. Thus, retirement pay COLAs and annual active duty pay raises will differ. Also note; the annual COLA for the REDUX retirement method is reduced by one percentage point below the increase in the CPI. CSB/REDUX is the only retirement system that includes a re-adjustment to its retired pay amount. At age 62, retired pay is recomputed to what it would have been under High-36. Also, at age 62, a one-time COLA adjustment is made that applies the cumulative effects of High-36 COLA (CPI) to the new retirement base. Afterwards, future COLAs are again set to CPI minus 1 percent.

Source: https://militarypay.defense.gov/Benefits/Survivor-Benefit-Program/CSB-REDUX-Costs-and-Benefits/

Military retired pay is subject to a dollar for dollar offset when the retired member is also in receipt of VA disability compensation. However, there are two programs that restore partial or full retired pay when a member is eligible for concurrent DoD and VA payments. See the Concurrent DoD and VA Payment page for details.

Additionally, all retirees may choose to participate in the Survivor Benefit Plan (SBP) or the Reserve Component Survivor Benefit Plan (RCSBP), which enables the member to provide a continuing annuity to their family after death, based on the retired pay. The SBP and RCSBP programs are discussed in the benefits section.

Finally, remember that after age 62, Social Security will likely provide additional retirement benefits.

Source: https://militarypay.defense.gov/Pay/Retirement/