U.S. Military Retirement — Complete Guide

Quick orientation

This page is an educational overview of the major U.S. military retirement paths. It is formatted so each retirement type can be expanded into a "deep detail" view (click the headings). For personal planning you should consult your service retirement office, DFAS, and the VA — rules and benefit amounts can change and some calculations are case-specific.

Retirement types (overview)

1) Regular (Active Duty) Retirement — 20+ years

Who: Most active duty service members with 20+ qualifying years (varies by service). A typical path is full retirement after 20 years of active service.

Deep detail

Eligibility: Generally 20 qualifying years of active service (including certain creditable prior service). Some career fields and early-retirement programs alter timing.
Calculation: Retired pay is based on a multiplier (2.5% × years under legacy) × retired pay base (High-3, Final Pay, or BRS/High-3 hybrid). See "How Pay Is Calculated" section.
Health: Tricare eligibility begins for retirees and eligible dependents (rules vary for Reserve "gray-area" retirees until pay starts).
Pros: Stable lifetime retired pay, health benefits, commissary/Exchange access, and potential concurrent VA benefits.
Cons: Requires lengthy service commitment; sometimes lower civilian retirement portability vs private sector defined-contribution plans.

2) Early / Reduced Retirement — Temporary or force-shaping programs

In select drawdowns or force-shaping events, Congress or the services may authorize early retirement options (for example, Temporary Early Retirement Authority — TERA) for eligible members with at least 15 years. These are not always available.

Deep detail

Timing: Program dependent. TERA historically allowed retirement before 20 with reduced pay — available only while authorized.
Pay impact: Often results in lower lifetime retired pay because of fewer service years and sometimes different multipliers.
Pros: Allows transition to civilian life earlier; useful during force reductions.
Cons: Lower monthly retired pay and may affect eligibility windows for some benefits.

3) Medical / Disability Retirement (MEB/PEB / IDES)

What: When a service member is found unfit for duty due to service-connected injury/illness through the Medical Evaluation Board (MEB) and Physical Evaluation Board (PEB), they may be placed on disability retirement or separated with severance pay.

Deep detail

Threshold: A combined disability rating of 30% or higher (military rating) typically results in medical retirement with retired pay and benefits. Ratings below 30% usually generate a lump-sum severance payment instead of retirement.
Process: Under the Integrated Disability Evaluation System (IDES), DoD and VA coordinate evaluations and share medical evidence and ratings. The VA provides a disability rating used in the decision and to start VA benefits.
Pay & benefits: Disability retired pay is computed differently from regular retired pay; the member also receives lifetime Tricare and other retired benefits if medically retired. Veterans may be eligible for VA compensation; retirees often must elect or may be eligible for Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC).
Pros: Lifetime benefits, health care, and potential higher total compensation if disability ratings are significant.
Cons: Medical retirement can limit future civil service or other employment in certain fields, and the IDES process can be lengthy and administratively complex.

4) Reserve/Guard Retirement ("Gray Area" and Age-60 pay)

Reservists and National Guard members earn retirement points. With 20 qualifying years they are eligible for retired pay at age 60 (sometimes earlier if certain active service periods qualify).

Deep detail

Points: Retirement points come from drill days, active duty days, and certain courses. 7200 points (or 20 years at 360 points/year) converts to 20 years of service.
Gray-area retirees: Members who have 20 qualifying years but are <60 are called "gray-area retirees" — they have some benefits (access to ID cards in certain circumstances) but do not receive retired pay until age 60 (or reduced age if eligible).
Calculation: Reserve retired pay uses formulas similar to active duty but converts points to years (points/360) and multiplies by the appropriate multiplier and pay base (High-36 or Final-Pay depending on plan).
Pros: Allows part-time servicemembers to accrue retirement; provides lifetime income later in life.
Cons: Delayed cash flow (often decades between service and pay); complexity in tracking points.

5) Transitional Options — Severance pay, TDRL, and Separation

Not all separations yield a retirement. Severance pay (for <30% disability) and Temporary Disability Retirement List (TDRL) for severe but potentially improving conditions are available.

Deep detail

Severance: One-time payment instead of retirement for lower disability ratings; no lifetime retired pay or military health benefits.
TDRL: Temporary placement for those whose conditions may improve — periodic re-evaluations can result in return to duty, permanent retirement, or separation.
Pros/Cons: Severance provides immediate funds but lacks lifetime benefits; TDRL preserves potential for future retirement if condition doesn't improve.

How retired pay is calculated — simplified

The core idea: retired pay = multiplier × retired pay base. The multiplier depends on years of service and the retirement system; the base is a monthly pay value (High-3 average, Final Pay, or BRS-equivalent).

High-level formulas and examples

Legacy (pre-BRS) examples

Under the legacy multiplier many plans used 2.5% × years of service as the multiplier for regular retirement. Example: 20 years → 50% × High-3 average basic pay.

BRS (Blended Retirement System)

BRS kept the High-3 multiplier but added a defined-contribution element (Thrift Savings Plan — TSP) and government matching (up to 5%) for eligible members and a mid-career continuation pay incentive for some. Members who entered service on/after Jan 1, 2018 default to BRS unless they opted out.

Medical retirement pay

Medical retiree pay can be computed using either the disability percentage applied to base pay or the standard retired pay formula — whichever is more favorable depending on circumstances and service rules.

Quick sample calculation (High-3)

High-3 = average of highest 36 months basic pay
Multiplier = 2.5% × years of service
Example: 20 years → 0.025 × 20 = 0.50 → 50% × High-3 monthly base = retired pay

Medical retirement & IDES (deep)

Medical evaluation and disability ratings are jointly handled by DoD and VA through the Integrated Disability Evaluation System (IDES). The process determines fitness for duty and VA disability ratings used for benefit entitlement.

Step-by-step: MEB → PEB → VA rating

Illness/Injury: Treated while on active duty or discovered after an event.
MEB (Medical Evaluation Board): Clinical review determines if condition meets retention standards.
PEB (Physical Evaluation Board): Evaluates fitness for continued service and assigns disability ratings; determines whether member is fit, qualifies for TDRL, or should be medically retired or separated.
VA rating: VA assigns a disability rating for compensation — this rating is used in IDES and for VA benefits such as monthly compensation, healthcare, and vocational rehab.
Outcome: Medical retirement (≥30% combined), severance (<30%), or placement on TDRL.

Concurrent benefits: CRDP & CRSC

Retirees with VA disability may be eligible for programs that restore or offset retired pay that was reduced because of VA compensation rules:

CRDP (Concurrent Retirement & Disability Pay)

Gradually restored the ability for retirees with VA disability to receive both retired pay and VA compensation without waiving retired pay. Eligibility rules exist (mostly for retirees with 20+ years and a VA rating of 50%+ historically, though eligibility has evolved).

CRSC (Combat-Related Special Compensation)

Provides tax-free compensation for retirees with combat-related disabilities. It is separate from CRDP and has its own eligibility criteria focused on combat connection.

Reserve & Guard — how "non-regular" retirement works

Reserve retirement is based on a points system. Once a member accumulates the equivalent of 20 qualifying years it establishes a Notice of Eligibility (NOE) for retirement pay at the appropriate age.

Points, NOE, and receiving pay

Each year a reservist earns points through drills, active duty days, and other creditable activities.
The typical conversion is points ÷ 360 = years of service for retirement calculation purposes.
After 20 qualifying years the member receives a Notice of Eligibility (NOE) and becomes a "gray-area" retiree until reaching the retirement pay age (often 60), unless the age is reduced by qualifying active duty.

How DoD and VA interact — what they pay and why both matter

Roles

DoD / DFAS: Calculates and pays military retired pay and administers military-specific programs (CRDP/CRSC program administration often coordinated with services and DFAS).
VA: Determines service-connection and disability ratings for compensation, provides VA healthcare, education and other veteran benefits, and participates in IDES to share ratings with DoD for medical retirements.

Common questions

Can I receive VA disability and military retired pay at the same time?

Generally, VA disability compensation and military retired pay are separate: by law, a retiree normally must waive an equal amount of retired pay to receive VA compensation if both are due, but programs such as CRDP or CRSC may restore or provide tax-free offsets depending on eligibility. Individual circumstances and eligibility rules apply.

How do IDES and ratings affect benefits?

Because VA and DoD share information under IDES, the VA rating assigned during the IDES process is used to determine VA compensation and plays directly into DoD decisions about medical retirement vs severance. Proper documentation and timely appeals can materially affect outcomes.

Checklist & next steps

Identify which retirement path most closely matches your situation (regular, reserve, medical, early/severance).
Gather documentation: DD Form 214(s), service treatment records, medical records, performance records, and leave/points history.
Contact your service retirement office early — attend required briefings and complete required forms (e.g., DD 2656 for retired pay).
Initiate VA claims concurrently if medical — IDES links DoD and VA processes for efficiency.
Use DFAS calculators and official guidance to estimate retired pay and plan budget, taxes, and TSP distributions.