How military retired pay is worked out
Active-duty retired pay is a simple formula: multiplier × years of service × High-3. Your High-3 is the average of your highest 36 months of basic pay, which for most people is the last three years before retirement. Allowances such as BAH and BAS do not count, and neither do special pays or bonuses.
| System | Who is in it | Multiplier | At 20 years |
|---|---|---|---|
| Blended Retirement System (BRS) | Joined on or after January 1, 2018, or opted in during 2018 | 2.0% a year | 40% of High-3 |
| High-3 | Joined between September 8, 1980 and December 31, 2017 and did not opt in to BRS | 2.5% a year | 50% of High-3 |
BRS pays a smaller pension, but it adds government contributions to your Thrift Savings Plan: an automatic 1% of basic pay from day 60, plus matching of up to another 4% after two years of service. Members who leave before 20 years keep that TSP money, while under High-3 they leave with no pension at all.
Example
An E-7 retiring at 20 years has a High-3 of about $6,118.50 from the 2026 pay table: the average of basic pay at over 16 and over 18 years. Under BRS, 40% of that is $2,447.40 a month. Under High-3, 50% is $3,059.25 a month. Serving to 24 years raises both the multiplier and the High-3.
What the estimate leaves out
The BRS lump-sum option lets you take 25% or 50% of your pension's discounted value as cash at retirement, in exchange for reduced retired pay until full Social Security retirement age. Disability retirement, Guard and Reserve points-based retirement, and the old REDUX/Career Status Bonus option follow different rules. Concurrent receipt with VA disability depends on your rating.
Common questions
Is military retired pay taxed? Yes, by the federal government as ordinary income. Many states exempt it in full or in part. See state taxes on military pay.
Does retired pay go up each year? Yes. It rises every January with inflation. The increase for 2027 is 3.6%.
When do payments start? The month after you retire from active duty, paid on the first business day of each month.
