Know what your military retirement is actually worth — before you decide to stay or go.

High-3 (Legacy System): Applies to service members who entered before January 1, 2018 and had 12 or more years of service as of December 31, 2017, and those who opted out of BRS during the 2018 window. Defined benefit pension only — no TSP matching.

Blended Retirement System (BRS): Applies to everyone who entered service on or after January 1, 2018, plus legacy members who opted in during the 2018 window. Combines a slightly smaller pension with mandatory government TSP contributions.

REDUX (rare): Some legacy-era service members accepted a $30,000 Career Status Bonus at 15 years in exchange for a reduced retirement COLA adjustment. REDUX has significantly reduced the real value of the pension over time for most who chose it.

If you're unsure which system you're on: your LES will show TSP matching contributions if you're on BRS. You can also verify through your MyPay account.

High-3 formula: Monthly pension = Multiplier × Average highest 36 months of base pay

• At exactly 20 years: 50% (2.5% × 20)
• At 22 years: 55%
• At 30 years: 75% (maximum)

The "highest 36 months" means the three consecutive years of highest base pay — almost always your final 36 months. High-3 retirees receive annual COLA adjustments equal to the full CPI-W inflation rate.

Example — O-5 retiring at exactly 20 years:

• Final base pay: ~$9,660/month (2026 O-5 at 20 years)
• Highest 36-month average: ~$9,200/month
• Pension: 50% × $9,200 = $4,600/month ($55,200/year), for life with COLA

BRS formula: 2.0% per year (not 2.5%), reaching 40% at 20 years and 60% at 30 years. The pension reduction is partially offset by TSP matching over a career.

The TSP is the federal government's equivalent of a 401(k), available to all service members. Key advantage: expense ratio of 0.055% — you pay $0.55 per year for every $1,000 invested. The average actively managed mutual fund charges 10–20× more. This difference compounds dramatically over a career.

2026 contribution limits:

• Annual elective deferral: $24,500
• Catch-up (age 50–59 and 64+): additional $8,000 → total $32,500
• Enhanced catch-up (ages 60–63, SECURE 2.0): additional $11,250 → total $35,750
• Combat zone: total annual additions limit rises to $72,000 — Roth TSP remains capped at $24,500; contributions above that from tax-exempt combat-zone pay go into the traditional tax-exempt portion of TSP, not Roth

TSP fund options:

• G Fund: Government securities, zero volatility, currently ~4–5% annually
• C Fund: S&P 500 index (large-cap U.S. equities)
• S Fund: Small/mid-cap U.S. equity index
• I Fund: International equities index
• L Funds: Lifecycle funds, automatically adjust allocation by target retirement date

Traditional TSP: Contributions are pre-tax (lower taxable income now), but withdrawals in retirement are fully taxable.

Roth TSP: Contributions are after-tax (no tax break now), but qualified withdrawals — including all growth — are tax-free.

Factors commonly considered for each approach:

• Traditional TSP: Reduces current taxable income — valuable in higher brackets or when you expect a lower rate in retirement. Withdrawals are taxed as ordinary income.
• Roth TSP in lower-bracket years: An E-5 or O-2 in the 12–22% federal bracket may find Roth favorable if retirement income will push into higher brackets. Whether this pays off depends on actual future tax rates.
• Combat zone Roth opportunity: Contributions from combat-zone tax-exempt pay go into Roth TSP with no tax at contribution or on qualified withdrawal — one of the more notable tax-advantaged opportunities available to service members in a combat zone.
• Pension consideration: Military retirees already have a guaranteed taxable income stream. This may reduce the need for Traditional TSP withdrawals — but the right balance depends on your overall retirement income picture.

If you're on BRS, the government matching structure is:

• 1% automatic: The government deposits 1% of your base pay into TSP regardless of whether you contribute. Begins after 60 days of service. Vests at 2 years — separate before then and you forfeit it.
• Dollar-for-dollar on first 3%: Contribute 3% → government adds 3%. This matching vests immediately.
• 50 cents on the dollar for next 2%: Contribute 4% → government adds 0.5%; contribute 5% → government adds another 0.5%.
• Maximum: 5% government contribution (1% auto + up to 4% match) when you contribute at least 5%.

Cost of under-contributing:If you contribute 3% instead of 5%, the top 1% of government matching is forfeited — approximately $28–$97/month depending on grade. For an E-5 at $4,110/month (6 years of service), that's roughly $41/month or $493/year in forfeited government contributions.

The 20-year mark is the financial cliff in regular active-duty retirement — retire at 19 years and 11 months and you receive exactly $0 in defined-benefit pension. Retire at 20 years and you receive a benefit for life. (Disability retirement, medical retirement, and special programs may have different rules.)

What the pension is actually worth:

An E-7 retiring at age 38 with a $3,100/month pension who lives to 82 will collect for 44 years. With COLA adjustments, the lifetime nominal value can easily exceed $2.9 million.

TRICARE: Military retirees qualify for TRICARE coverage — one of the most comprehensive and affordable health insurance options available. For a family, the difference between TRICARE and civilian employer coverage can exceed $10,000–$15,000/year. This benefit is frequently underweighted in retirement calculations.

The civilian salary you'd need: To match the financial value of military retirement (pension + healthcare + commissary/exchange access), a civilian job would need to offer significantly higher compensation than your final military base pay.

Veterans who retire with 20+ years and have a VA disability rating face a potentially complex interaction between the two income streams.

The old rule (pre-2004):Retirement pay was reduced dollar-for-dollar by VA compensation. You couldn't receive both in full.

CRDP (Concurrent Retirement and Disability Pay): Retirees with a VA disability rating of 50% or higher receive full retirement pay plus full VA compensation — no offset.

CRSC (Combat-Related Special Compensation): An alternative for retirees whose disability is specifically combat-related. CRSC is non-taxable — unlike retirement pay — which can net $400+/month more than CRDP for a retiree in the 22% bracket. You can only receive CRDP or CRSC, not both. Apply for CRSC through your branch's finance center.