Military Reserve Retirement
National Guard and Reserve servicemembers who complete a minimum of 20 "qualifying" years of service (creditable retirement years) become eligible for retired pay at age 60.
A law passed in early 2008 allows Reserve and Guard members with 20 or more years to begin drawing retirement benefits before age 60 if they deploy for war or national emergency. For every 90 consecutive days spent mobilized, members of the Guard and reserve will see their start date for annuities reduced by three months. But this law only applies for deployment time served after Jan. 28, 2008.
A qualifying year, under this system, is a year in which the servicemember earns at least 50 retirement points during their retirement year. Inactive point credit is earned for inactive duty training, Reserve membership, equivalent instruction, and correspondence courses.
By law, members may receive credit for up to 60 inactive points for retirement years that ended before September 23, 1996, up to 75 inactive points for retirement years ending on or after September 23, 1996 and before October 30, 2000, and up to 90 points in the retirement year that includes October 30, 2000 and in any subsequent year of service. Points from these sources may be added to points earned from active duty and active duty for training for a maximum total of 365 or 366 points per retirement year. Points are credited on the following basis:
- One point for each day of active service (active duty or active duty for training).
- 15 points for each year of membership in a Reserve Component (Guard and Reserve).
- One point for each unit training assembly.
- One point for each day in which a member is in a funeral honors duty status.
- Satisfactory completion of accredited correspondence courses at one point for each three credit hours earned.
Visit the Army Reserve Retirement Pay Calculator to get an estimate of your monthly retirement pay at age 60.
The Secretary of the military department concerned (Secretary of Homeland Security for the Coast Guard) notifies, in writing, members of the Reserve Forces who have completed the eligibility requirements for retirement and receipt of retired pay at age 60. Notice is sent to the member within one year of reaching eligibility. Reserve Component members generally have three options upon receiving notice of eligibility:
1. Remain in the Ready Reserve and continue to perform inactive duty training, annual training and active duty for training depending on their training and pay category, or remain on the active status list of the Standby Reserve and continue to perform unpaid training for the purpose of accumulating retirement points.
2. Transfer to the Retired Reserve. A member in this category may participate in inactive duty training provided:
a) Such training is at no expense to the Government.
b) Members are not entitled to pay or retirement points.
c) No official record of such participation is maintained.
3. Request discharge from the Reserve Components.
Note: Regardless of the option chosen, the member is entitled to receive retired pay at age 60, but must apply for it.
Reserve Component Retirement Pay Systems
Upon reaching age 60, a Guard or Reserve retiree may begin receiving retired pay. There are currently two Reserve retirement systems that parallel the systems for active duty: the Final Basic Pay System and the High-Three System. To determine which retirement system a Reserve Component member is under, look at the same criteria that determines the retirement system for the active force ? the Date of Initial Entry to Military Service (DIEMS). That is the date an individual first became a member of a uniformed service.
Note: The date an individual first became a member of a uniformed service is the sole determining factor in determining which retirement system is used when computing retired pay.
Formulas for Computing Retired Pay
- If you first entered a uniformed service* before September 8, 1980:
Compute your retired pay based on length of service by multiplying the basic monthly pay for your retired grade at the time of retirement by the years of creditable active federal service at the rate of 2.5 percent for each whole year of service. This is called the "Final Pay" retirement system. That means you get 50% for 20 years of service up to a maximum of 75% .
- If you first entered a uniformed service* between September 8, 1980 and July 31, 1986:
Compute your retired pay using the same formula as the Final Pay system above, except you use the average basic pay for your three highest paid years (36 months) rather than final basic pay. This is called the High 36. Under the High 36 system you you get 50% for 20 years of service up to a maximum of 75%.
- Your years of service are used to determine the value of each point. Your retirement points are multiplied by the approximate value of a point to produce the estimate monthly retired pay value. For example an E-9 with 20 years in 2009 would receive a valuation of approximately 0.360 per point whereas the same retiree would get 0.432 for 30 years of service.
* Uniformed services include the National Oceanic and Atmospheric Administration (NOAA) and the U. S. Public Health Service (USPHS).
An important factor: A member who retires under either system receives longevity credit for those years while a member of the Retired Reserve awaiting pay at age 60. However, this does not apply to a former member who is entitled to retired pay under either the Final Basic Pay System or the High-three System. A former member is defined as an individual who elected discharge rather than transfer to the Retired Reserve anytime after receiving notification of eligibility to receive Reserve retired pay at age 60. In the case of a former member, regardless of the system under which the individual will receive Reserve retired pay, longevity credit ceases on the date the former member was discharged.
Visit the Army Reserve Retired Pay Calculator at: http://www.hrc.army.mil/calculators/retirementcalc.aspx to estimate your retirement pay.
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