Key Takeaways:
- Know your retirement system: High-36 (legacy) uses a 2.5% multiplier; BRS uses 2.0% plus TSP matching—your DIEMS date determines which applies
- 2026 retiree COLA is 2.8% — Military retirement pay increased effective January 1, 2026
- TSP contribution limit for 2026 is $24,500 ($32,000 if age 50+), with BRS members receiving up to 5% DoD matching
- 20 years of service required for pension eligibility (medical retirement is an exception)
- Military retirement is tax-advantaged: Several states exempt military retirement pay from state income tax entirely
- Start planning early: TSP contributions in your first years of service can grow to over $1 million by retirement through compound growth
Table of Contents:
- Understanding Military Retirement Systems
- High-36 (Legacy) Retirement System
- Blended Retirement System (BRS)
- Thrift Savings Plan (TSP)
- How Military Retirement Pay Is Calculated
- 2026 COLA and Pay Adjustments
- Reserve and National Guard Retirement
- Medical/Disability Retirement
- Survivor Benefit Plan (SBP)
- Tax Considerations for Military Retirees
- Retirement Planning Timeline
- Retirement Planning Resources
- Frequently Asked Questions
Understanding Military Retirement Systems
The military retirement system you fall under depends entirely on your Date of Initial Entry into Military Service (DIEMS)—the date you first entered any branch of the armed forces. This date doesn’t change even if you leave and rejoin the military.
There are four retirement systems, but most service members today fall under either the High-36 (Legacy) system or the Blended Retirement System (BRS):
| DIEMS Date | Retirement System | Pension Multiplier |
|---|---|---|
| Before Sept 8, 1980 | Final Pay | 2.5% per year |
| Sept 8, 1980 – July 31, 1986 | High-36 | 2.5% per year |
| Aug 1, 1986 – Dec 31, 2017 | High-36 or REDUX* | 2.5% per year (High-36) |
| Jan 1, 2018 or later | Blended Retirement System (BRS) | 2.0% per year + TSP matching |
*Service members who entered between Aug 1, 1986 and Dec 31, 2017 could choose REDUX (with $30,000 Career Status Bonus at 15 years) or remain under High-36. Those who opted into BRS during the 2018 window are now under BRS.
The fundamental requirement across all systems: you must serve at least 20 years to earn a military pension. This is why understanding your retirement system early matters—it affects every financial decision throughout your career.
High-36 (Legacy) Retirement System
The High-36 system (also called “High-3”) is the traditional military pension that rewards long careers with a guaranteed lifetime income. If your DIEMS is before January 1, 2018 (and you didn’t opt into BRS), this is your system. Read our guide to BRS vs High-3 military retirement to learn more.
How High-36 Works
Your retirement pay is calculated using the average of your highest 36 consecutive months of basic pay (typically your last 3 years of service) multiplied by your years of service and the 2.5% multiplier:
Monthly Retirement Pay = Years of Service × 2.5% × High-36 Average
At 20 years, you receive 50% of your High-36 average. Each additional year adds another 2.5%, maxing out around 75% for those with 30+ years.
High-36 Example Calculation
An E-7 retiring at 24 years with a High-36 average of $5,800/month:
- 24 years × 2.5% = 60% multiplier
- $5,800 × 60% = $3,480/month ($41,760/year)
This payment continues for life, adjusted annually for cost of living (COLA), regardless of whether you work in the civilian sector afterward.
High-36 Advantages
- Higher pension multiplier: 2.5% vs BRS’s 2.0% means 25% more pension at any given years of service
- Simplicity: One guaranteed income stream for life
- No TSP dependency: Your retirement doesn’t depend on market performance
High-36 Considerations
- All-or-nothing: Leave before 20 years and you receive no pension
- No TSP matching: You can contribute to TSP, but DoD won’t match your contributions
Blended Retirement System (BRS)
The Blended Retirement System became mandatory for all service members entering after January 1, 2018. It “blends” a reduced pension with government contributions to your Thrift Savings Plan, providing retirement benefits even if you don’t serve a full 20 years.
BRS Components
BRS has four main components:
1. Defined Benefit (Pension)
Similar to High-36 but with a reduced multiplier of 2.0% per year instead of 2.5%:
Monthly Retirement Pay = Years of Service × 2.0% × High-36 Average
At 20 years, you receive 40% of your High-36 average (vs 50% under legacy systems).
2. TSP Automatic and Matching Contributions
The government contributes to your TSP in two ways:
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- Automatic 1%: DoD contributes 1% of your basic pay automatically after 60 days of service, whether you contribute or not
- Matching up to 4%: DoD matches your contributions dollar-for-dollar on your first 3%, then 50 cents on the dollar for the next 2%
To get the full 5% government contribution, you must contribute at least 5% of your basic pay. This is free money—never leave it on the table.
3. Continuation Pay
A one-time bonus at your 12-year mark (between 8-12 years of service, depending on branch and specialty) in exchange for a 4-year service commitment. The amount varies by branch:
- Active duty: 2.5× to 13× monthly basic pay
- Reserve/Guard: 0.5× to 6× monthly basic pay
4. Lump-Sum Option
At retirement, you can elect to receive 25% or 50% of your pension as a lump sum. Your monthly pension is then reduced until you reach full retirement age (67 for Social Security purposes). This option has significant drawbacks—consult a financial advisor before choosing it.
BRS Example Calculation
An E-7 retiring at 24 years under BRS with a High-36 average of $5,800/month, assuming 5% TSP contributions throughout career:
- Pension: 24 years × 2.0% = 48% → $5,800 × 48% = $2,784/month
- TSP: Assuming $500,000+ accumulated (with matching and growth)
- Total retirement income: Pension plus TSP withdrawals
While the pension is lower, the TSP component can potentially make total retirement income comparable to or exceeding High-36, depending on investment returns and contribution consistency.
BRS Advantages
- Portable: TSP contributions vest after 2 years—leave at 10 years and you keep your TSP balance
- Free money: 5% TSP matching is guaranteed return on your contributions
- Flexibility: You build wealth even if you don’t reach 20 years
BRS Considerations
- Lower pension: 20% reduction in the defined benefit compared to High-36
- Market risk: TSP returns depend on investment performance
- Requires discipline: You must contribute consistently to maximize benefits
Thrift Savings Plan (TSP)
The Thrift Savings Plan is the military’s equivalent of a 401(k)—a tax-advantaged retirement savings account with low fees and government matching (for BRS members). Whether you’re under High-36 or BRS, maximizing your TSP should be a priority.
2026 TSP Contribution Limits
| Category | 2026 Limit |
|---|---|
| Elective deferral (under 50) | $24,500 |
| Catch-up contributions (50+) | $8,000 additional ($32,500 total) |
| Annual additions limit (including matching) | $72,000 |
| Combat zone tax exclusion | Up to $72,000 tax-free |
Traditional vs Roth TSP
Traditional TSP: Contributions are pre-tax (reducing your taxable income now), but withdrawals in retirement are taxed as ordinary income.
Roth TSP: Contributions are after-tax (no tax deduction now), but qualified withdrawals in retirement are completely tax-free.
General guidance:
- Choose Roth if you’re junior enlisted (lower tax bracket now), expect higher taxes in retirement, or deployed to a combat zone (tax-free contributions that grow tax-free)
- Choose Traditional if you’re senior enlisted/officer in a higher tax bracket and expect lower taxes in retirement
TSP Investment Funds
TSP offers five individual funds and several Lifecycle (L) funds:
- G Fund: Government securities (lowest risk, lowest return)
- F Fund: Fixed income/bonds
- C Fund: Tracks S&P 500 large-cap stocks
- S Fund: Small and mid-cap U.S. stocks
- I Fund: International stocks
- L Funds: Lifecycle funds that automatically adjust allocation based on target retirement date
For comprehensive TSP strategies, contribution optimization, and investment guidance, see our Military TSP Guide 2026.
Critical TSP Mistake to Avoid
If you’re under BRS and max out your $24,500 contribution early in the year (say, by July), your contributions stop—and so does your matching for the rest of the year. Calculate your contribution percentage to reach $24,500 in December, not before.
How Military Retirement Pay Is Calculated
Step-by-Step Calculation
Step 1: Determine your retirement system based on your DIEMS date.
Step 2: Calculate your High-36 average. Add your basic pay for your highest 36 consecutive months (usually your last 3 years) and divide by 36. Only base pay counts—not BAH, BAS, or special pays.
Step 3: Apply the formula:
- High-36/Final Pay: Years of Service × 2.5% × High-36 Average
- BRS: Years of Service × 2.0% × High-36 Average (plus TSP)
Retirement Pay Examples by Rank and Years
| Rank | Years | High-36 Avg | High-36 Pension | BRS Pension |
|---|---|---|---|---|
| E-6 | 20 | $4,500 | $2,250/mo | $1,800/mo + TSP |
| E-7 | 22 | $5,200 | $2,860/mo | $2,288/mo + TSP |
| E-8 | 26 | $6,100 | $3,965/mo | $3,172/mo + TSP |
| O-4 | 20 | $9,000 | $4,500/mo | $3,600/mo + TSP |
| O-5 | 24 | $10,500 | $6,300/mo | $5,040/mo + TSP |
Note: BRS pension amounts don’t include TSP accumulation, which could add significant retirement income depending on contribution levels and investment returns.
For detailed calculations including the 2026 pay tables and interactive calculator, visit our 2026 Military Retirement Pay Guide.
2026 COLA and Pay Adjustments
Military retirement pay is adjusted annually based on the Cost-of-Living Adjustment (COLA), which tracks the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
2026 COLA Rates
- Military retirees (High-36, Final Pay, BRS): 2.8% increase
- REDUX retirees: 1.8% increase (CPI minus 1 percentage point)
- VA disability compensation: 2.8% increase
- SBP annuities: 2.8% increase
The 2026 COLA took effect with December 2025 entitlements, appearing in payments around January 1, 2026.
Recent COLA History
| Year | COLA Increase |
|---|---|
| 2026 | 2.8% |
| 2025 | 2.5% |
| 2024 | 3.2% |
| 2023 | 8.7% |
| 2022 | 5.9% |
COLA compounds over time, which is why military retirement maintains its purchasing power across decades.
Reserve and National Guard Retirement
Reserve component members earn retirement through a points-based system rather than years of service. You need 20 “qualifying” years (years with at least 50 retirement points) to be eligible for retirement pay, which begins at age 60 (or earlier with qualifying active duty time).
How Reserve Retirement Points Work
- Inactive duty training (drills): 1 point per drill period (typically 48 points/year from 24 drill weekends)
- Annual training: 1 point per day (typically 14-15 points)
- Active duty orders: 1 point per day
- Membership points: 15 points/year just for being in the reserves
- Correspondence courses, funeral honors, etc.: Additional points available
A typical year earns approximately 78 points. You can earn a maximum of 365 points in any retirement year.
Reserve Retirement Calculation
Monthly Retirement Pay = (Total Points ÷ 360) × Multiplier × High-36 Average
Example: A reserve E-7 with 3,600 career points and High-36 average of $5,200:
- 3,600 ÷ 360 = 10 equivalent years
- 10 × 2.5% = 25% multiplier (High-36 system)
- $5,200 × 25% = $1,300/month starting at age 60
Early Retirement for Reserves
The retirement age of 60 can be reduced by 3 months for each cumulative 90-day period of active duty service performed after January 28, 2008. The minimum age is 50.
Medical/Disability Retirement
If you’re found medically unfit for duty with a DoD disability rating of at least 30%, you may qualify for medical retirement even without 20 years of service.
Medical Retirement Calculation
Your retirement pay is calculated using either:
- Disability percentage method: Disability Rating % × High-36 Average
- Years of service method: Years × 2.5% × High-36 Average
You receive whichever calculation produces the higher amount, capped at 75%.
Temporary vs Permanent Disability
If placed on the Temporary Disability Retired List (TDRL), your condition will be re-evaluated periodically. After a maximum of 5 years, you’ll either be permanently retired, separated with severance, or returned to duty.
Survivor Benefit Plan (SBP)
The Survivor Benefit Plan provides continuing income to your eligible survivors after your death. Without SBP, your military pension stops when you die.
SBP Basics
- Coverage amount: You can elect coverage from $300/month up to your full retirement pay
- Annuity: Your beneficiary receives 55% of your covered amount
- Cost: 6.5% of your covered retirement pay (deducted from your pension)
- COLA: SBP annuities receive annual COLA adjustments
SBP Enrollment
Enrollment decisions must be made at retirement. If you’re married and decline spouse coverage (or elect less than full coverage), your spouse must concur in writing. Once enrolled, coverage is generally irrevocable except in limited circumstances.
After 30 years of participation or reaching age 70 (whichever is later), premiums are no longer deducted—you have “paid-up” SBP.
Tax Considerations for Military Retirees
Federal Taxes
Military retirement pay is subject to federal income tax. However, if you have VA disability compensation, the portion of your retirement pay offset by VA disability is tax-free (this is called Concurrent Retirement and Disability Pay, or CRDP).
State Taxes
State tax treatment of military retirement varies significantly:
States with no income tax (retirement pay not taxed):
- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
States that fully exempt military retirement pay:
- Alabama, Arizona, Arkansas, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, West Virginia, Wisconsin
Note: Laws change frequently. Verify current tax treatment with your state’s department of revenue.
For an interactive map and detailed state-by-state breakdown, see our Veteran Benefits by State guide.
Retirement Planning Timeline
Early Career (0-10 Years)
- Start TSP contributions immediately—contribute at least 5% to get full BRS matching
- Consider Roth TSP while in a lower tax bracket
- Build emergency fund (3-6 months of expenses)
- Understand your retirement system
Mid-Career (10-15 Years)
- Evaluate whether to stay for 20 years (pension) or transition
- If under BRS, plan for Continuation Pay at your 12-year mark
- Increase TSP contributions toward maximum
- Begin tracking High-36 average projection
Late Career (15-19 Years)
- Request retirement estimate from your branch’s finance office
- Decide on SBP coverage levels
- Research healthcare options (TRICARE Retiree)
- Plan for income gap if needed before pension starts
Pre-Retirement (12-24 Months Out)
- Attend Transition Assistance Program (TAP)
- Complete DD Form 2656 (retirement application)
- Finalize SBP election
- Set up myPay for retirement payments
- Obtain military ID card for retirees
Retirement Planning Resources
Official Calculators
- DoD BRS Comparison Calculator
- TSP.gov Retirement Calculators
- MyArmyBenefits Retirement Calculator
- MyAirForceBenefits Retirement Calculator
USMilitary.org Retirement Resources
- 2026 Military Retirement Pay Calculator & Charts
- Military TSP Guide 2026: Contribution Limits & Strategy
- 2026 Military Pay Charts
- Best IRA Accounts for Military Members & Veterans
- Veteran Benefits by State
- VA Pension and Aid & Attendance
Official Government Resources
- DoD Blended Retirement System
- DFAS Retired Military Pay
- Thrift Savings Plan (TSP.gov)
- Military OneSource
Frequently Asked Questions
Under High-36, you receive no pension if you leave before 20 years (except for medical retirement). Under BRS, you keep your vested TSP balance (including matching contributions if you’ve served at least 2 years), but you receive no pension.
Yes. Your military pension continues regardless of civilian employment income. However, if you work for the federal government, dual compensation rules may apply—consult DFAS or OPM for specifics.
Retirement pay is paid on the first business day of the month following your retirement date. For example, if you retire on March 15, your first payment arrives around April 1.
Generally, yes. Military retirement pay is protected under federal law from most creditors. However, it can be garnished for child support, alimony, and certain federal debts (like unpaid taxes).
Military retirees and their families are eligible for TRICARE coverage. Retirees under 65 typically use TRICARE Prime or Select; those 65+ transition to TRICARE For Life (which works with Medicare). See our TRICARE Plans Comparison for details.
For most retirees, no. The lump-sum option significantly reduces your lifetime pension payments and the discount rate applied reduces the present value of your future payments. Only consider this option after consulting a financial advisor and understanding the long-term impact.
If you have a VA disability rating of 50% or higher and qualify for military retirement, CRDP allows you to receive both your full military retirement pay AND your VA disability compensation without offset. This effectively increases your total monthly income.
Yes, through the Uniformed Services Former Spouses’ Protection Act (USFSPA), state courts can treat military retirement pay as marital property and award up to 50% to a former spouse in divorce proceedings.
Disclaimer: This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Department of Defense, DFAS, or any government agency. For official retirement information, contact your branch’s finance office or visit DFAS.mil.