How Much Will Your Military Pension Be? 2021 Update

Have you decided to make the military a career? Great! Now is a great time to start planning around what your pension will be when you retire from the military. If you aren’t sure if a career in the military is for you, understanding what your military pension could be if you did finish 20 years (or more) in the military should be included as one of the factors in your decision.

Last week, the 2021 National Defense Authorization Act (NDAA) was passed, which included approval for a 3% military pay raise for service members. You can find the official 2021 military basic pay tables on the DFAS website. Since the NDAA finally passed and the 2021 pay tables have been officially posted, I updated the military retirement estimates to include 2021 basic pay.

One of the biggest financial benefits of a career in the military is the pension you receive when you retire after at least 20 years of active duty service. Currently, there are two main retirement systems in place: The High-3 (or High-36) system and the Blended Retirement System (BRS). The High-3 system takes the average of your highest 3 years (36 months) of base pay and multiplies it by a factor of 2.5% per year of military service (i.e. 50% for 20 years or 60% for 24 years). The BRS was rolled out in 2018. It provides a lower pension percentage per year of service, 2.0% (i.e. 40% for 20 years or 50% for 25 years), but BRS includes Thrift Savings Plan (TSP) matching contributions of up to 5% of basic pay.

I put together estimated retirement pay charts for 2021 through 2040. These are estimates for monthly retirement pension checks. For previous years, I used the pay tables on the DFAS website, but future calculations for the retirement charts were conservatively made, using only a 1% base pay increase per year going forward, compared to an average of 2.78% base pay increase from 2018 to 2021. The charts go from E-6 through E-9, W-1 through W-5, and O-3E through O-10, and calculations were done for the High 3 retirement system and the BRS. They also assume a mid-year retirement of June 30^th and retiring at full years of service, not fractional years. Your own retirement numbers will be slightly different, but I’m hoping these conservative estimates for a military pension will help you successfully plan for life after the military.

Below is an example calculation for an E-7 retiring at 24 years of service

Years on Active Duty	Time Period	Basic Pay	Time Period	Basic Pay
21	July – Dec 2018	$4676.10	Jan – June 2019	$4797.60
22	July – Dec 2019	$4974.30	Jan – June 2020	$5128.50
23	July – Dec 2020	$5128.50	Jan – June 2021	$5282.40

To estimate the military pension for the above example, I used each six month period for a total of the 36 months of base pay. Then you divide the total of the 36 months of base pay by 36 to get an average for base pay, which is $4997.90 in this example. Then you use your retirement multiplier (2.5% per year of service for High-3 and 2% per year of service for BRS) to determine your monthly pension. So for this example, retirement for the High-3 system would be $2999 per month and $2399 per month for the Blended Retirement System