If you’re considering retiring, you need to know what your military pension will look like. Fortunately, several retirement calculators are available to help you estimate your monthly retirement benefit. The Department of Defense has officially launched a new tool that allows BRS opt-in eligible service members to compare retirement systems individually.
What is the Blended Retirement System (BRS)?
The Blended Retirement System (BRS) is the new way of earning a military pension. The BRS provides a defined benefit, a lifetime monthly retirement annuity, to those who complete 20 years of service or more. It replaces the legacy High-3 annuity calculation of a monthly benefit of average of your highest three years of base pay times 2.5 % per year of service.
The BRS also offers a lump sum option at the time of retirement that gives you the choice to receive a 25% or 50% lump sum payment discounted to present value in exchange for reduced monthly annuity payments until you reach full retirement age. Your retired annuity will then return to the full amount.
The BRS is a big change and requires active engagement by all service members to make it work for them. If you are considering opting in, talk to your installation Personal Financial Management Office or unit CFS for assistance.
How do I Calculate My Military Retirement Pay?
A military retirement calculator is a great way to see your retirement pay. This is especially helpful if you are thinking about retiring in the near future and want to get an idea of what your monthly pension will be once you leave active duty.
The first step in calculating your military retirement is to determine which retiree pay base system you will be under. This will be determined by the date of your initial entry into military service. Your retired base pay method will determine whether you are under Final Pay, High 36, or the Blended Retirement System.
For BRS members, the retired pay base is your final average of 36 months of basic pay. This is also known as the high-36 method. Each year of service contributes 2.5% toward your service percent multiplier. This is how each service member’s military pension grows as they add years to their service.
What is My Retired Pay Base?
A service member’s retired pay base is the average of the monthly base pay they received in their final three years of active military service. The amount is then multiplied by their service percent multiplier or, if in BRS, their service time plus 2.5%.
This calculation differs slightly from the legacy High-36 formula as it is based on an average of your highest 36 months of base pay and a service percentage multiplier of either 2.5 or 2%. It also is protected from inflation with an annual Cost of Living Adjustment (COLA).
There are several calculators available online to help you estimate your retirement income, including the Final Pay, High-36, Redux, and BRS Calculator. The DFAS site includes additional tools, a COLA Calculator, and information about the Thrift Savings Plan.
How Do I Calculate My Retirement Benefit?
Whether you are an active duty service member who has been pondering retirement or simply want to know how much your retired pay will be, there are military pension calculators that can help you estimate your military benefit. These calculators use either the final pay or high-36-month average method to establish your retired pay base.
The difference between these two methods is that final pay has a cap at 40 years and high-36 has a cap of 30 years. Regardless of which retirement plan you are using, every year of service results in a 2.5% increase in your service percentage multiplier.
All retirement systems protect against inflation with an annual Cost of Living Adjustment (COLA). This COLA is based on the Consumer Price Index for Urban Wage Earners published by the Department of Labor. Depending on your retirement system, you may also have the option to enroll in the Service Continuation Benefit Program (SBP). This plan offsets SBP costs over your lifetime.