Military Retirement – What It Means for Veterans

CCK Law: Our Vital Role in Veterans Law

Service members who have served in the US Armed Forces for a certain period of time can be eligible for military retirement upon the conclusion of their military career. What is military retirement and how long must a service member serve in order to be eligible for retirement?

Military Retirement Pay

In order to be eligible for retirement, a service member must have served for at least 20 years in the military’s career service program. After 20 years, service members will be eligible to receive a certain percentage of their basic pay. If they have 40 years of service, they can be eligible for 100% of their basic pay. These benefits begin the day the service member retires no matter their age.

Types of Retirement Pay

There are three military retirement systems for which veterans may be eligible based on when they entered the service:

1. Final Pay. The Final Pay Retirement System is for individuals who entered the service before September 1980. Retirement pay in this system is the final base pay times 2.5% for each year of active duty. An individual can retire after 20 years and get half of their final base pay, or they can retire after 30 years and get 75% of their base pay.
2. High 36. The High 36 system is for individuals who entered the service between September 8^th 1980 and August 1986. For individuals in this system, retirement pay is calculated by multiplying their average of their highest 36 months of base pay, by 2.5% for every year they served on active duty. If you retire after 20 years of service, an individual will get half of the average of their highest three years of base pay. If an individual retires after 30 years, they will receive 75% of their highest three years of base pay.
3. Individuals who entered service after August 1986 are eligible for the REDUX system. Under the REDUX system, individuals can choose between the High 36 system, or the Career Status Bonus/REDUX (CSB) system. The CSB/REDUX system pays individuals a $36,000 bonus on their 15^th year of active service. To balance this out, the individual’s retirement pay is reduced to 40% of the average of their highest three years of base pay if they retire after 20 years of service. If an individual retires after 30 years of service, they will receive 75% of their highest three years of base pay.

Military Retirement due to Disability

If a service member is determined to be unfit for duty with a disability rated at 30% or greater, they can be eligible for disability retirement. If an individual’s condition is not stable, they can be put on the temporary disability retired list (TDRL) for up to five years. After the five years, they must then be discharged, retired, or returned to duty. If an individual’s condition is stable at 30% or higher, they can be placed on the permanent disability retired list (PDRL).

For retirement due to a disability, the system of retirement pay is determined depending on when the individual entered service (see above).

Concurrent Receipt of Military Retirement and VA Disability

When a veteran receives military retirement pay and VA disability compensation, VA requires that veterans waive part of their retirement pay. This means that the veteran will receive their disability compensation minus their military retirement pay. This is called a VA waiver.

Veterans who received military retirement pay and VA disability compensation can be eligible for Concurrent Retired and Disability Pay (CRDP). CRDP is the restoration of the service retired pay that had been withheld from the VA waiver. In the case of military retirement pay, the VA waiver is eliminated. Veterans would receive a check from the Defense Finance and Accounting Service (DFAS) with their full retired pay.

There is no application for CRDP. Retirement pay will be restored for veterans who are eligible.

Concurrent Receipt for Military Retirement due to Disability

Veterans who retired from the military with a service disability rating may not be eligible to receive the full amount of their VA waiver. For veterans who retired due to a disability, their retired pay is increased based on their in-service disability rating, but CRDP is limited to the portion of the retirement pay that is based on the veteran’s years of service. This means that DFAS will only restore the amount of the VA waiver that was based on the veteran’s years of service, not the amount that is based on in-service disability rating.

Find out more about eligibility for CRDP here.