Military Retirement Pay
High 36
The High 36 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. In addition, each year your pension is increased by a Cost of Living Adjustment (COLA).
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If you retire after 20 years of service, you receive 50% of the average monthly pay of the 36 month period in which you were highest paid.
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Your pension increases by 2.5% 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.
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Each year a cost of living adjustment is added to your base pension. The increase is equal to the Department of Labor's consumer price index, 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
Sergeant Smith plans on retiring after 30 years of service. He began active duty service in 1982, which qualifies him for the High 36 plan.
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During his final 36 to 25 months he will earn $2,199.30 a month.
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During his final 24 to 13 months he will earn $2,283.90 a month.
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During his final 12 months he will earn $2,998.50 a month.
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Therefore, his average monthly pay during his final 36 months will be $2,493.90.
Because Sergeant Smith will have served 10 years past the 20 year mark, add 2.5% for each of those 10 years to his 50% pension. Therefore, Sergeant Smith's pension will be 75% of $2,493.90. His monthly base pension will be $1,870 because:
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Furthermore, each year Sergeant Smith's pension will increase with a Cost of Living Adjustment.
