With recent changes in the last ten years to the retirement system for the United States Military, it is without question one of the better deals around. In the military, when you serve on active duty, you can receive a compensation for your level of reduced services (retirement) that starts the very first day that you retire. It does not matter how old you are. You could conceivably retire from the military as early as age thirty-seven. The retirement that you receive also has benefits such as medical, and is now adjusted for a cost of living increase each year.
Benefits for people who retire off of Reserve status are different, and the way of accumulating those points are different. We will deal with active duty for this discussion. There are several different issues or factors which determine how much your individual pension or military retirement will be. Congress and the Department of Defense have made several changes in military retirement over the last twenty-five years. One of the most notable has been the National Defense Authorization Act. This was a law that was passed in fiscal year 2007, and involved lifting the retirement cap. There was previously a seventy five percent cap that was used to calculate the retired pay for members.
Now, if a Servicemember retires with over thirty years of active service they will receive credit and be compensated for that service over thirty years. This eliminated the cap that limited pay before. Members who retire for reason of disability will still be capped at seventy five percent. Also due to the way that the law reads, if a Servicemember is slated to receive an additional amount because of Extraordinary Heroism if you serve in the Air Force or Army, it may still not exceed seventy five percent. This does not apply for Servicemembers in this category that have more than thirty years of service.
If you entered the service before 09/1980 you are able to retire under the system called Final Pay. If you entered the service between 09/08/1980 and 08/1986 you are eligible for a retirement system called the High 36 system. Anyone entering the military service after 08/1986 you can choose either of two systems, High 36, or one called CSB, or Career Status Bonus/Redux. Those Servicemembers who don’t make a choice are entered into the High 36 plan automatically. Those who retire from Military service are allowed to continue to receive unlimited non-discretionary allotments, and up to six discretionary allotments.