Understanding your military retirement pay doesn't have to be complicated. Whether you're 5 years from retirement or just starting your career, knowing exactly how your pension is calculated helps you plan your financial future with confidence.
In this guide, we'll break down the exact formulas used to calculate military retirement pay, walk through real examples for enlisted and officer ranks, and show you exactly what to expect when you hang up the uniform.
Quick Answer: With 20 years of service under the High-3 system, you'll receive 50% of your highest 36-month base pay average. An E-7 retiring in 2026 receives approximately $3,005/month. An O-5 receives approximately $5,471/month.
In This Guide
Which Retirement System Are You In?
Before calculating your retirement pay, you need to know which system applies to you. There are three military retirement systems:
Entered service before September 8, 1980
Retirement based on final base pay (not average)
Entered between Sept 8, 1980 and Dec 31, 2017
Most common system - uses highest 36-month average
Entered Jan 1, 2018 or later (or opted in)
Lower multiplier (2.0%) but includes TSP matching
Most Common: If you entered service between 1980 and 2017 and didn't opt into BRS, you're under the High-3 system. This guide focuses primarily on High-3, with BRS calculations covered separately.
The High-3 Formula Explained
The High-3 (also called High-36) retirement system calculates your pension based on the average of your highest 36 consecutive months of base pay. Here's the formula:
High-3 Retirement Formula
20 years = 50% of High-3 Average
24 years = 60% of High-3 Average
30 years = 75% of High-3 Average
What Counts as "Base Pay"?
Only your basic pay counts toward retirement calculations. The following are NOT included:
- Basic Allowance for Housing (BAH)
- Basic Allowance for Subsistence (BAS)
- Special pays (flight pay, hazardous duty, etc.)
- Bonuses
- Combat Zone Tax Exclusion amounts
What is "High-3 Average"?
Your High-3 average is calculated by taking your highest 36 consecutive months of base pay and dividing by 36. For most service members, this is simply your last 3 years of service since pay typically increases over time.
Step-by-Step Calculation
Let's walk through exactly how to calculate your retirement pay:
Find Your Base Pay for the Last 36 Months
Look up your base pay for each of the last 36 months of service. If you received a promotion during this time, use the actual pay for each month. For most people, you can simplify by using your average rank and years of service.
Calculate Your High-3 Average
Add up all 36 months of base pay, then divide by 36.
Simplified method: If your rank stayed the same, take your average base pay over the 3 years. With annual pay raises of ~3-4%, your High-3 average will be close to your pay at 1.5 years before retirement.
Calculate Your Multiplier
Multiply your total years of service by 2.5%.
Examples:
20 years × 2.5% = 50%
22 years × 2.5% = 55%
24 years × 2.5% = 60%
26 years × 2.5% = 65%
Apply the Formula
Multiply your High-3 average by your multiplier percentage.
Example: $6,010 High-3 average × 50% = $3,005/month pension
2026 Base Pay Tables
The 2026 military pay raise of 3.8% took effect January 1, 2026. Here are the base pay figures for common retirement scenarios:
2026 Enlisted Base Pay (Monthly)
2026 Officer Base Pay (Monthly)
Source: 2026 Military Pay Tables reflect 3.8% increase effective January 1, 2026. Data from DFAS and DoD Military Pay.
Enlisted Retirement Examples
Let's calculate retirement pay for common enlisted scenarios:
$36,060/year
$46,884/year
More Enlisted Examples
Officer Retirement Examples
$65,652/year
$110,376/year
BRS (Blended Retirement System) Calculation
If you entered service on or after January 1, 2018 (or opted into BRS), your calculation uses a 2.0% multiplier instead of 2.5%:
BRS Retirement Formula
20 years = 40% of High-3 Average (vs 50% for High-3)
BRS vs High-3 Comparison
| Factor | High-3 (Legacy) | BRS |
|---|---|---|
| Multiplier per year | 2.5% | 2.0% |
| 20-year pension | 50% of High-3 | 40% of High-3 |
| TSP Matching | None | Up to 5% match |
| Continuation Pay | None | 2.5-13x monthly pay at 12 years |
| Lump Sum Option | No | Yes (25% or 50%) |
BRS Example: An E-7 with 20 years under BRS receives 40% × $6,010 = $2,404/month pension (vs $3,005 under High-3). However, with disciplined TSP contributions and 5% government matching over 20 years, the total retirement package can be similar or better.
Years of Service Multiplier Chart
Here's a quick reference for retirement multipliers at different service lengths:
| Years of Service | High-3 Multiplier | BRS Multiplier | Example (E-7, $6,010 avg) |
|---|---|---|---|
| 20 | 50% | 40% | $3,005/mo |
| 22 | 55% | 44% | $3,306/mo |
| 24 | 60% | 48% | $3,606/mo |
| 26 | 65% | 52% | $3,907/mo |
| 28 | 70% | 56% | $4,207/mo |
| 30 | 75% | 60% | $4,508/mo |
How to Maximize Your Retirement Pay
Your retirement pay is largely determined by years of service and final rank, but here are strategies to maximize it:
1. Promote Before Retirement
A promotion in your final years significantly increases your High-3 average. Even a promotion 2 years before retirement improves your pension for life.
2. Consider Staying Past 20 Years
Each additional year adds 2.5% to your multiplier. Staying from 20 to 24 years increases your pension by 20% (from 50% to 60% of your High-3).
3. Time Your Retirement with Pay Raises
Annual pay raises (3.8% in 2026) apply to your base pay. Retiring after a pay raise means higher base pay in your High-3 calculation.
4. Understand What Doesn't Count
BAH, BAS, and special pays don't count toward retirement. Focus on base pay when evaluating assignments.
Pro Tip: Use our Military Retirement Calculator to see exactly how your pension combines with VA disability and state taxes. Many veterans don't realize how much their total package is worth.
Calculate Your Complete Retirement Picture
See how your military pension combines with VA disability, state taxes, and civilian income needs.
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Frequently Asked Questions
How much is military retirement pay with 20 years?
With 20 years under the High-3 system, you receive 50% of your highest 36-month base pay average. In 2026, an E-7 receives approximately $3,005/month ($36,060/year), while an O-5 receives approximately $5,471/month ($65,652/year).
Is military retirement pay taxed?
Military retirement pay is subject to federal income tax. However, 37 states either have no income tax or fully exempt military retirement from state taxes. See our Best States for Military Retirees guide.
When do I start receiving retirement pay?
You begin receiving retirement pay the month after your retirement date. DFAS typically processes your first payment within 30 days of retirement.
Does military retirement pay increase over time?
Yes! Military retirees receive annual Cost of Living Adjustments (COLA) based on the Consumer Price Index. The 2026 COLA for military retirees was 2.8%.
Can I receive both military retirement and VA disability?
Yes, but it depends on your disability rating. With 50% or higher VA disability, you receive both full military retirement AND full VA disability through Concurrent Retirement and Disability Pay (CRDP). VA disability is always 100% tax-free.
What if I retire with less than 20 years?
Generally, you need 20 years for regular retirement. However, medical retirement is available for those medically separated. The TERA (Temporary Early Retirement Authority) program, when active, allows retirement with 15-19 years with reduced benefits.
Summary: Quick Retirement Pay References
| Rank | 20 Years | 24 Years | Annual (20 yr) |
|---|---|---|---|
| E-6 | $2,638/mo | $3,428/mo | $31,656 |
| E-7 | $3,005/mo | $3,907/mo | $36,060 |
| E-8 | $3,436/mo | $4,467/mo | $41,232 |
| O-4 | $4,886/mo | $6,352/mo | $58,632 |
| O-5 | $5,471/mo | $7,112/mo | $65,652 |
| O-6 | $6,598/mo | $8,577/mo | $79,176 |
Figures are estimates based on 2026 pay tables and the High-3 formula. Actual amounts may vary based on exact service dates and promotions.