Not knowing nor planning for your retirement in advance could induce unnecessary stress and uncertainty. With proper planning and information it is possible to experience a smooth transition from serving in the Army to the civilian world. Planning for retirement is not the same for everyone. It is important to understand your unique situation when considering your financial stability, continuing health care coverage, lifestyle choice, and the actual exit process.
For non-disability active duty retirement:
Enlisted soldiers must complete 20 years for a service retirement
Medical personnel must complete 15 years of creditable service for a medical retirement
Exception/waivers may apply
Soldier For Life – Transition Assistance Program
Soldier For Life-Transitional Assistance Program(SFL-TAP) is a mandatory pre-separation program available at each installation’s SFL-TAP Center that helps Army service members to ease the challenges going back to the civilian world by providing them the tools and information necessary. Soldiers who are looking to retire or separate from the army should start this SFL-TAP process early, between 12–24 month prior to the actual separation date. The SFL-TAP consists of the following parts:
- Pre-separation counseling (DD form 2648)
- The 3 day Department of Labor Employment workshop (DOLEW)
- Two briefings on Veteran Affairs benefits
- Additional career counseling session and the job assistance training program (JATA)
- Final verification of your career readiness, the Individual Transition Plan Counseling Checklist (DD form 2958 signed by commander/approved designee)
There are also special events at the SFL-TAP center that bring hiring employers to connect with soldiers who are ready for transition, or short classes on resume writing, job interviewing, etc. The retirees will be granted permissive Temporary Duty Status(TDY) for 20 days for those retiring within the continental united states (30 days for those outside of CONUS) that help them with job hunting, house searching, and other relocation activities.
See the FAQ for more detailed information on Soldier For Life – Transition Assistance Program.
You don’t have to wait till the first retirement paycheck to figure out how much you will be getting in the pocket. You can plan and budget beforehand by understanding how the retirement pay is calculated.
The Final Pay plan uses your final basic pay as your retirement pay base, with a multiplier of 2.5%. To retain consumer purchasing power, there will be a cost of living adjustment(CPI) to help with inflation. Your retirement pay would be calculated as the following:
Final Basic Pay x (2.5%) x Total years of your active service
This means 20 years of service would mean a 50% multiplier. That is to say; your retirement pay would be half of your final basic salary.
A service member who entered the service before September 8th, 1980 are eligible for the Final Pay plan.
The High-36 retirement plan uses the average of your higher 36 months of base pay to determine your retirement pay. The multiplier is at 2.5% per year, and the cost of living adjustment rate remains the same as the CPI.
A service member who enter the service after the Sept 8th, 1980 are eligible for this plan if they haven’t chosen the REDUX or accepted the 30,000 Career Status Bonus.
The REDUX retirement plan also uses the High-36 to determine the base retirement pay, with a $30,000 Career Status Bonus (CSB) at 15 years mark. However, the retirement multiplier is reduced by 1% each year for a service member with 30 years or less service, and the cost of living adjustment(CPI) is reduced by 1% each year regardless of years of service.
At Age 62, your retirement pay will adjust to the High 36 basic pay and multiplier will revert back to 2.5%. The CPI, however, will still be reduced by 1%.
A service member who enter the service after Aug. 1st, 1986 are eligible for this plan.
The Disability retirement pay would either be at the rate of the Final Pay or the High-36, but the multiplier may be higher than 2.5% per each year of service, or it could be the disability percentage assigned by the Army at retirement. The maximum disability retirement multiplier is topped at 75%.
We did some math for you here calculating your retirement pay using High-36 and REDUX separately. It turned out that the maths it doesn’t make much sense to take out the 30,000 CBS at 15-year service mark and getting your retirement pay reduced every year. Almost at every rank level, the High 36 plan yield a higher salary the REDUX plan, and the 30,000 bonus cannot make up your retirement salary loss long term.
Retire Pay Calculator
Click here to use the retirement pay calculator to compare between High 36 plan and CBS/REDUX plan and see it for yourself.
Between 90 and 180 days before your actual retirement date, it is important to schedule a Separation History and Physical Examination (SHPE).
From the date of separation, you will no longer be covered by your Tricare Plan. To continue Tricare coverage, Soldiers who are eligible must re-enroll into one of the Tricare health care plans within 90 days of the actual retirement date.
You can choose to enroll in the Tricare Retiree Dental program for a fee too.
Read more about healthcare here.
Besides the retirement pay and the healthcare, the Army will still take care of you to ensure you live the life you want outside of the military. For instance, many people choose to go back to school using their GI Bill. As mentioned above in the Education section (provide the link to the education section), GI Bill is typically valid for 10 or 15 years after the day you separated from your active duty service. If you don’t see yourself using the GI Bill, you may be able to transfer this education benefit to your spouse, kids or other dependents.
The Commission and Base Exchange are still available to all eligible Army active duty retirees and their families.(for those who serve outside the united states, you may lose access to Commission and Base Exchange due to the foreign treaty) You can continue to shop there(in-store or online) to get groceries, electronics and daily goods for a discounted price.
Retirement is a process instead of a one time event. Make sure to get the procedures right so that you can successfully separate from the military without any hassle.
Exit process (apply for retirement)
- Confirm when your active duty service obligation ends
- Attend two briefing–pre-retirement briefing from the Retirement Service Office and the Survivor Benefit Plan briefing(SBP)
- Attend Soldier for Life- Transitional Assistance Program
- Prepare for delay in final pay
- Submit pay document as soon as possible, so that you can determine whether you still owe military money
- Keep your direct deposit account open at least for 1 year
- Update your MyPay contact information