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The U.S. Army retirement pension is calculated based on a service member’s years of service and base pay. The initial entry date into the Armed Forces (DIEMS) determines which formula is used to set the monthly amount.
According to MyArmyBenefits, there are different retirement systems that set different percentages of the reference salary.
How long do you have to serve in the Army to get a pension
In general, Regular Army members must complete at least 20 years of active duty to qualify for retirement pay. The percentage increases with additional years of service and the system each service member falls under.
How to know which military retirement system applies to you
The DIEMS date helps identify the applicable retirement plan:
- Final Pay: for those who entered before Sept. 8, 1980.
- High-36: for those who entered between Sept. 8, 1980, and July 31, 1986, as well as certain later service members.
- CSB/REDUX: a voluntary option for certain members who entered on or after Aug. 1, 1986 and before 2003.
- BRS: Blended Retirement System, in effect for those who entered on or after Jan. 1, 2018.
How the pension is calculated under the Final Pay plan
This method uses the service member’s last base pay. After 20 years of service, the pension is 50%, with an increase of 2.5% for each additional year.
For example, a soldier who retires after 24 years receives 60% of final base pay:
- 20 years: 50%.
- Four additional years: 10%.
- Total: 60%.
If base pay were $5,000, the monthly pension would be about $3,000 before deductions.
The system also includes annual cost-of-living adjustments (COLA).
How much the High-36 plan pays
The High-36 system uses the average of the highest 36 months of base pay instead of the final salary. The formula starts at 50% after 20 years and adds another 2.5% for each additional year.
For example, with 24 years of service, the service member receives 60% of the average pay. If that average were $5,000, the estimated pension would be $3,000 per month.
What the REDUX system is and how much it pays
REDUX allowed a $30,000 bonus after 15 years of service, in exchange for committing to complete 20 years of service.
Unlike High-36, this system starts at 40% of average pay after 20 years and adds 3.5% for each additional year.
With 24 years of service, the percentage reaches 54%. If the average of the 36 highest-paid months were $5,000, the initial pension would be $2,700 per month.
The system includes a special adjustment upon turning 62, but it keeps reduced cost-of-living adjustments after that.
It is worth noting that no new CSB/REDUX agreements have been allowed since January 2018. Existing contracts remain in effect.
How BRS works
In effect since 2018, BRS combines a monthly pension with government contributions to a Thrift Savings Plan (TSP) account.
The formula is: Years of service × 2% × average of the 36 highest months of base pay.
For example:
- 20 years of service: 40%.
- 24 years of service: 48%.
It also includes automatic and matching government contributions to the TSP of up to 5% of base pay, a continuation bonus, and the option to receive 25% or 50% of certain future retirement payments in advance, with a temporary reduction in monthly pension.