Federal military retired pay is, technically, reduced compensation for reduced services. Retired pay for length of service ranges from 40 percent to 75 percent of basic pay. The following factors apply in determining your retired pay:

• Grade at retirement
• Date of Initial Entry on Military Service (DIEMS)
• Qualifying years of service for retired pay
• Total creditable points for retired pay

To figure retired pay:

1. Divide the number of creditable retirement points by 360. This is equivalent years of service earned. For example, 3600 points equals 10 equivalent years of service.
2. Multiply the equivalent years of service by 2.5 percent up to a maximum of 75%.
3. Multiply the percentage by:
   • basic pay (determined by retired grade and years of service) for members who first joined before September 8, 1980
   • the average of the highest 36 months of basic pay for members who joined after September 8, 1980

Total years of service for retired pay are calculated at time of separation/discharge unless the member elected to transfer to the Retired Reserve. Members in the Retired Reserve at age 60 have their total years of service for retired pay calculated at age 60. A cost of living allowance (COLA) annually increases the monthly retired pay.

Retired pay begins on the eligible former member's 60th birthday, but it is not automatic. To begin receiving federal retired military pay, complete the DD Form 108 application. The application packet must also include DD Form 2656 (Data for Payment) and SF 1199A (Direct Deposit). You should also include copies of your final NGB Form 23 (Army Guard Retirement Points) or AF Form 526 (Air Guard Points), any documents substantiating additional retirement points, and DD Form 1883 (Survivor Benefit Plan Election), as appropriate.

Related Site:

> US Army Human Resources Command Information