Retired Pay

Military retired pay is divided into three general categories:

  • Retired pay for regular service
  • Retired pay for non-regular (Reserve/Guard) service
  • Retired pay for physical disability

With the exception of retirement for physical disability and certain temporary authorities for early retirement, a service member must have completed 20 years of service in order to be eligible for retired/retainer pay (Department Of Defense Military Pay & Allowances Entitlements Manual (DODPM), VOL 7B, Chapter 1).

How Retired Pay is Calculated

A Veteran’s retired pay for all categories is computed by applying a percentage multiplier to his or her monthly retired pay. The basic retirement formula is:

Retired Pay Base    X    Multiplier %

The multiplier percentage is generally 2.5 percent for each year of service; however, in the case of disability retirement, the percentage may be the disability percentage awarded by the service upon retirement.

Disability Retirement Pay

If your condition is not stable, you may be placed on the Temporary Disability Retired List (TDRL) for up to five years, at which point you must be discharged, retired or returned to duty. Members whose condition has stabilized at a disability rating of 30 percent or higher may be placed on the Permanent Disability Retired List (PDRL). Both TDRL and PDRL retired pay is computed by either your Disability Percentage (Method A) or Years of Active Service (Method B).

Disability retirement is sometimes called Chapter 61 retirement, since the law governing such a retirement is in Chapter 61 of title 10 United States Code. Members who have been determined to be unfit for duty by the military with a disability rating of 30 percent or greater are eligible for disability retirement.

Multiplier %: Disability Percentage (Method A) and Years of Active Service (Method B)

In accordance with 10 USC 1401, Veterans are entitled to receive retired pay computed using Disability Percentage (Method A) or Years of Active Service (Method B). In either case, the multiplier is limited to 75 percent by law, even if you were rated above 75 percent. Defense Finance and Accounting Services (DFAS) will apply the multiplier percentage that will most benefit you.

Retired Pay Base: Final Pay Method and High-36 Month Method

The retired pay base for a qualified disability retirement is determined by either the Final Pay Method or the High-36 Month Method, which is dependent on when you first entered military service. If you entered the military after September 7, 1980, then your retired pay base is computed using the average of the last 36 months of your monthly base pay instead of your last active duty basic pay (10 USC 1407). If you were on active duty for less than 36 months, it is the average monthly basic pay you received while serving.

Example: Below is a scenario and estimate of what a Veteran who has 5 years, 00 months, and 17 days of service would receive under both methods:

Disability Percentage (Method A)
Before September 7,1980
Years of Active Service (Method B)
After September 7, 1980

Active Duty Base Pay: Final Pay

$2,500

Active Duty Base Pay: High-36 Month

$2,069.65

Percentage of Disability

60%

Years in Service

5.00

Percentage Multiple

N/A

Percentage Multiple

2.5%

Gross Pay

$1,500

Gross Pay

$258

Frequently Asked Questions

Do I receive both retired pay and VA pay?

It depends on the time in service and VA rating. If you have 20 years of service in addition to a 50 percent or more VA disability rating, you would be eligible for Concurrent Retirement and Disability Pay (CRDP).If you do not qualify for CRDP and your VA entitlement is greater than the retired pay amount, you will not receive retired pay.
For additional information on CRDP, visit our CRSC/CRDP page.

I got promoted on my last day of service. Why am I not receiving retirement pay at my promoted grade level?

Retired pay is calculated by averaging the last 36 months of pay received, unless you joined the military before September 7, 1980.

I am an Army Wounded Warrior Program (AW2) Solder transitioning from the Army. Why am I required to retire on the 27th of the month?

This is so you can begin receiving payments in one month versus two. It allows Veteran Affairs (VA) to process paperwork on the first day of the following month and DFAS to establish your account.

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