The following chart summarizes the differences between the four retirement plans.
At age 62,
1) retired pay made equal to High-36
2) future multiplier made equal to High-36
3) future COLA continues at CPR - 1%
The below chart provides the basic criteria to determine which retirement plan applies to you.
Service members who remain on active duty or serve in the Reserves or
Guard for a sufficient period of time (usually a minimum of 20 years)
may retire and receive retired pay. Members who become disabled while on
duty may be medically retired and receive a disability retirement.
There are four basic retirement plans; Final Pay, High-36 Month Average,
REDUX and Disability.
All four of the retirement plans determine initial monthly retired
pay by taking the member's retired pay base and subjecting it to a
Retired Pay Base X Multiplier %
There are two methods for determining the retired pay base. They are
the final pay method and the high-36 month average method. The final pay
method, as the name implies, establishes the retired pay base equal to
final basic pay. 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 to 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:
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
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
Now, based upon the date you initially entered the military, you can determine which retired pay base method applies to you.
For both the Final Pay and High-36 retired pay plans each year of
service is worth 2.5% toward 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%.
In any case, the longer an individual serves, the higher the multiplier and the higher the retirement pay. For example:
*The multiplier does not apply to the REDUX
retirement plan at under 20 years of service since REDUX is only an
active duty retirement plan.
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 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.
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 enable 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.
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