Whether soldiers get paid for life after retiring from service is a complex question with some nuances. In short, military retirement pay provides income for many retired servicemembers, but it is not technically a pension for life in most cases.
Military Retirement Overview
Members of the United States armed forces who serve for at least 20 years become eligible to retire and receive retirement pay. The amount of retirement pay is calculated based on the servicemember’s base pay and how many years they served. It is essentially a monthly payment the retiree receives for life.
However, there are some caveats:
- Retirement pay is usually only about 50% or less of the retired pay base. A servicemember who made $5,000 per month on active duty would likely get around $2,500 per month in retirement pay.
- Cost of living adjustments are made annually to keep pace with inflation, but there are no other guaranteed pay raises after retirement.
- The retirement pay gets suspended if the retiree takes a civilian job with the federal government.
- At age 62, the retirement pay is recalculated and reduced for those who also qualify for Social Security benefits.
- Surviving spouses receive a portion of the retirement pay after the retiree dies, but other dependents do not.
In addition, disability pay, disability benefits from the VA, and other factors can affect retired pay. So while military retirees do receive monthly income for life, it is not an unconditional lifetime pension.
Non-Disability Retired Pay
The bulk of military retired pay falls under non-disability retirement pay. This is what most career servicemembers receive after at least 20 years of active duty service.
The monthly amount is based on the following formula:
- Retired pay base (average of highest 36 months of basic pay)
- Multiplied by 2.5% for each year of creditable service
- Capped at 75% of retired pay base after 30 years of service
So if a soldier retired with 20 years of service with a retired pay base of $4,000, their monthly retired pay would be $4,000 x 2.5% x 20 years = $2,000. With 30 years and a $4,000 base, it would max out at $4,000 x 75% = $3,000.
Example Retired Pay Table
| Years of Service | Retired Pay Multiplier | $3,000 Retired Pay Base | $5,000 Retired Pay Base |
|---|---|---|---|
| 20 years | 50% | $1,500/month | $2,500/month |
| 25 years | 62.5% | $1,875/month | $3,125/month |
| 30 years | 75% (max) | $2,250/month | $3,750/month |
Disability Retired Pay
Military retirees who have a VA disability rating can choose to receive tax-free disability retired pay instead of regular retired pay. This is calculated as either their earned retirement pay or their rated disability compensation amount, whichever is higher. They cannot receive both.
For example, if a retiree with 20 years of service and a $4,000 retired pay base gets a 30% VA disability rating of $600 per month, they would receive the $600 because it is higher than the $800 (20% of $4,000 base) in retirement pay.
Retired Pay and Social Security
One significant change to military retired pay happens at age 62 for those who also qualify for Social Security benefits based on earnings during active duty service. At age 62, the monthly military retirement pay is recalculated to account for Social Security.
Rather than receiving full retired pay and Social Security payments separately, the retired pay is reduced by the amount of Social Security the retiree qualifies for. This is known as the Social Security offset. It prevents “double dipping” but often significantly reduces total monthly income from military retirement and Social Security.
Retired Pay for Reservists
Reserve and National Guard members must serve 20 creditable years to qualify for retired pay, just like active duty members. However, since they serve part-time, it usually takes significantly longer to accumulate 20 years of creditable service.
Their retirement pay is calculated in the same way, but it begins at age 60 rather than immediately upon retirement. The amount is based on the average basic pay for their highest 36 months of service rather than their final pay.
Retired Pay for Medical Retirement
Active duty members who are medically retired due to a combat or service-related injury or illness are eligible for disability retirement pay. The pay is calculated as the amount they would receive for longevity retirement or their disability rating percentage, whichever is higher.
For example, if a servicemember with 8 years of service is medically retired with a 60% disability rating, they would receive 60% of their retired pay base rather than 20% (8 years of service) of their base pay.
VA Disability Compensation
In addition to retired pay, disabled military retirees are eligible for VA disability compensation. This tax-free payment is designed to compensate the veteran for their average loss of earnings capacity in the civilian work force due to their disability.
However, veterans cannot “double dip” and receive both the full amount of their military retired pay and their VA disability pay. They must choose to receive one or the other, or a combination that does not exceed the full retired pay amount.
Retired Pay for Spouses
Current spouses of military retirees can receive a portion of the retiree’s retirement pay after the retiree dies. This survivor benefit payment is equal to 55% of the monthly retired pay the servicemember was receiving at the time of death.
Payments continue for the remainder of the surviving spouse’s life unless they remarry before age 55. Spouses who remarry after 55 can continue receiving the survivor benefit.
Do Retirees Get Free Health Care?
Military retirees and their dependents are eligible for health coverage through TRICARE. It offers low out-of-pocket costs compared to civilian plans. Most services are covered, but there are still deductibles, co-pays, and costs for things like dental care and eye exams.
After age 65, TRICARE becomes secondary payor to Medicare. Retirees must enroll in Medicare Part B to continue their TRICARE coverage.
Other Benefits
In addition to retired pay and health coverage, military retirees maintain access to other benefits like access to military bases, space-available flights, discounts at military facilities, the GI Bill for future education, and more. Veterans with a disability rating also receive additional benefits.
Conclusion
In summary, military retirement pay provides a regular monthly income for life for retired servicemembers. However, the amount is limited compared to active duty pay, reduced at age 62, suspended if taking another federal job, and ends for most dependents when the retiree dies. It is not a 100% pension for absolute life.
But for those who serve 20+ years on active duty or in the reserves, military retired pay helps offset the loss of civilian retirement savings and provides a livable income in recognition of their service.