Retiring from the Army is one of the biggest decision a Soldier will make.
While a Soldier’s retirement decision will have many important variables, the amount he or she receives in retired pay is more than likely at the top of the list. Although there are retired pay calculators on the internet, understanding how retired pay is calculated is a valuable tool.
To calculate retired pay, a Soldier must know his or her date initially entered military service, commonly referred to as DIEMS. The DIEMS date is the earliest date of enlistment, induction, or appointment in a regular or reserve component – not necessarily the basic active service date. These two dates can differ if the Soldier was in ROTC, at West Point, or in the delayed entry program or delayed commissioning program.
Most Soldiers who have a DIEMS date after Sept. 7, 1980, are in the High-3 retirement plan. Soldiers whose DIEMS is after July 31, 1986, also fall under the High-3, plan but have the option to elect to take part in the REDUX retirement plan and receive a $30,000 bonus at their fifteenth years of active federal service, commonly referred to as AFS.
Soldiers whose DIEMS is prior to Sept. 7, 1980, fall under the final pay plan, which does not require calculation.
The High-3 plan uses a retired pay base with a multiplier to determine gross retired pay. The retired pay base is the average basic pay of the Soldier’s highest paid 36 months of AFS. The key here is “highest paid 36 months” which, in most situations, is the last 36 months of AFS. While determining the retired pay base seems easy, remember that during the last 36 months of service there may have been changes in pay because of promotion, longevity and pay raises. The 36 months that are averaged must be the highest paid or last 36 months of active service.
The multiplier begins at 50 percent for 20 years of AFS. Any complete months and years beyond this are credited at a rate of 2.5 percent per year of AFS and .02 percent for every complete month. For example, a Soldier with 21 years of service would have a multiplier of 52.5 percent. A Soldier with 21 years and one month of AFS would have a multiplier of 52.7 percent, which accounts for the extra full month.
Soldiers who have earned retirement points while serving in the Reserves or National Guard will have those points credited towards the multiplier.
Calculating retired pay for those who choose the REDUX retirement plan is almost the same. The difference is that the multiplier begins at 40 percent for 20 years of AFS. Additional years and months beyond this are credited at a rate of 3.5 percent per year of AFS and .29 percent for every complete month.
Armed with the knowledge of how to calculate retired pay, a Soldier can better determine if, or when to retire.
The Retirement Services Office staff briefs preretirement and the survivor benefit plan every two weeks. Soldiers with 18 years AFS or more are welcome to attend. For more information, visit the Retirement Services’ webpage at http://www.campbell.army.mil/Soldiers/Separation/Pages/Retirements.aspx.
Theodore Faulkner is the chief of the Personnel Processing Branch/Retirement Services Office that is located in Fort Campbell’s Soldier Support Center, 2702 Michigan Ave.