Military Retirement Pay

Career Status Bonus/REDUX

The Career Status Bonus/REDUX (CSB/REDUX) plan bases your monthly pension on the average monthly pay of the 36 month period in which you were highest paid. The longer you serve after 20 years, the larger your monthly pension, and each year your pension also is increased by a Cost of Living Adjustment (COLA). Furthermore, when you reach age 62, your retirement pay is adjusted up to equal the base pay you would have receive if you had been enrolled in the High 36 plan.

If you retire after 20 years of service, you receive 40% of the average monthly pay of the 36 month period in which you were highest paid.
Your pension increases by 3.5% for every year of service beyond 20 years. So after 30 years of service, you could retire with a monthly pension that equals 75% of the average monthly pay of the 36 month period in which you were highest paid.
Each year a cost of living adjustment is added to your base pension. The increase is based upon the Department of Labor's consumer price index, minus 1%. The consumer price index is a measure of how much more it costs to live in the United States over the past year. So each year, depending upon the rise in the consumer price index, your pension could rise by several percentage points. Over the years these increases add up and could more than double your pension.

Example

Captain Bob plans on retiring after 27 years of service. He began active duty in 1990, which qualifies him for the CSB/REDUX plan.

During his final 36 to 25 months he will earn $4,987.30 a month.
During his final 24 to 13 months he will earn $5,109.30 a month.
During his final 12 months he will earn $5,240.70 a month.
Therefore, his average monthly pay during his final 36 months will be $5,112.43.

Because Captain Bob will have served 7 years past the 20 year mark, add 3.5% for each of those 7 years to his base 40% pension. Therefore, Captain Bob's pension will be 64.5% of $5,112.43. His monthly base pension will be $3,297 because:

JoeMath
$5,112.43 (average of highest 36 months of pay) × 64.5% (40% + 24.5% [7 years × 3.5%]) $3,297 CSB/REDUX monthly pension

Furthermore, each year Captain Bob's pension will increase with a Cost of Living Adjustment.

JoeChoice: CSB/REDUX or High 36

After you reach 15 years of active duty service, you must choose between the CBS/REDUX and High 36 retirement plans. If you choose the CBS/REDUX plan, you receive a $30,000 taxable bonus at that time and commit to at least 5 more years of active duty service.

JoeNote

Only basic pay is considered in retirement pay calculations; allowances and special pays are not considered.

JoeNote

Your monthly pension cannot exceed 75% of the average monthly pay of the 36 month period in which you were highest paid.

JoeNote

Military retirement pay is rounded down to the nearest dollar.

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