Military Pay and Benefits

Military Retired Pay

Francis Lewis (Army) takes a breather in the fitness center, which keeps the residents active and healthy. Courtesy Armed Forces Retirement Home

The military retirement system just recently changed.  Most will say for the better - some say not.  Here are the details of both systems since current military members can be grandfathered into the new system or opt out of the new system signed into law and enacted in 2018:

The National Defense Authorization Act for Fiscal Year 2016 created a modernized retirement system for the military.  This new retirement system is effective January 1, 2018.

  Everyone serving today can stay under the current system if they choose.  Those with fewer than 12 years of service as of December 31, 2017 will have an opportunity to opt-in to the new system during calendar year 2018. 

HISTORY:  Prior to 2016 Military Retirement System

Military personnel can retire after 20 years of active duty service. A military member who retires at 20 years of service receives 50 percent of his/her monthly base pay. For each year served over 20 years, the military member receives an additional 2.5 percent, up to a maximum of 75 percent of their base pay, at 30 years of service.

Military members who entered the service after September 8, 1980, but before August 1, 1986, fall under a slightly different system that pays a little less. Instead of a direct percentage of the base pay they were receiving at the time of retirement, these members receive a percentage of their average base pay during the three years of service when their pay was the highest (which is usually, but not always their last three years of service).

FUTURE:  More Details of the New System

National Defense Authorization Act changes the way the military saves and pays its members retirement benefits, but will not go into effect until January 2018.  Service members who joined after 2006 but before January 1, 2018 will have the choice of whether to stay with the existing system or opt into the new “Blended Retirement System.” Those who joined before 2006 will remain in the current system.

Blended Retirement will benefit the entire force. Currently, approximately 81 percent of those members who join the military leave with no retirement benefit. Under the Blended Retirement System, about 85 percent of Service members will receive a retirement benefit, even if they don’t qualify for full retirement (in other words - serve a complete 20 years).

Blended Retirement will enroll all Service members joining after January 2018 into the Thrift Savings Plan (TSP), with automatic and matching Department of Defense (DoD) contributions. After completion of two years of service, the Service member is vested and that money belongs to them. If you leave, it goes with you.

Obviously, the Department of Defense will have an educational campaign on the new system with the ability to personally calculate your savings and retirement package.  

Introductory Information on 2018 System

Warrant Officer Retirement Pay

Commissioned Officer Retirement Pay