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Military Retirement – What Used to be Simple is Now Complex

military retirementWhile the military has never been known for straightforward, get-to-the-point regulations, it used to be that your military retirement was so simple a private could do it. That is not the case any more. Apparently Congress decided that the computation of military retirement pay was entirely too simple and matters needed to be more complicated. Keep in mind that, unlike other first responder workers, there is no retirement account that military members contribute to or become vested in. You serve your time, you get your retirement. Pretty simple.

It also used to be simple to calculate exactly what your military retirement pay would be. Put in 20 years of service and draw 50% of your base pay upon retirement beginning immediately. Serve longer than 20 years and you add 2.5% for each additional year up to a maximum of 75%.

Nice, wasn’t it? Sweet simplicity.

The Navy and Marine Corps must have felt especially compelled to shake things up. Though you can still “retire” after 20 years of service, you are transferred to retainer pay status and placed in fleet reserve (able to still be called to duty) until you reach 30 years of service, at which time you are officially changed to retirement pay status. The difference between retainer pay and retirement pay? Nothing. It’s merely a matter of semantics.

For all branches of service, there are now three separate types of retirement, depending upon when you entered the service:

  • Prior to 1980
  • Prior to 1986
  • And the following gem of military speak…

“A little known provision of the law, changed in 1980, states that if you are a commissioned officer or an enlisted with prior commissioned service, you must have at least 10 years of commissioned service to retire at your commissioned rank. If you have less than 10 years of commissioned service, and voluntarily retire, you retire at your enlisted rank, and only the highest 36 months of active duty enlisted base pay counts for retirement computation. The Service Secretary can waive this to 8 years. Note: The secretarial waiver authority expired on December 31, 2001.”

And we haven’t even touched on the new military retirement computation method yet. Read this article on Understanding US Military Retirement Pay for a detailed treatment of the subject. We’re too tired to go on.

The Heroic Investing Team


Flickr / The U.S. Army