Military Retirement Money Guide

At a glance

Your retired pay

A 20-year retirement pays a monthly pension for life, adjusted for inflation each year. Which formula applies depends on when you entered service.

High-3 (Legacy)

For most who entered between September 1980 and the end of 2017. Your pension is 2.5% times your years of service times your High-3 average (the average of your highest 36 months of basic pay). Twenty years is 50%, thirty years is 75%.

Blended Retirement System (BRS)

For those who entered in 2018 or later, or who opted in. The pension multiplier is 2.0% per year (a 20-year pension is 40%), and in exchange BRS adds TSP contributions with a government match of up to 5% and a mid-career Continuation Pay bonus. The lower pension is meant to be offset by the portable TSP balance you build along the way.

Source: DoD Military Compensation and DFAS. Use the official calculators for your exact numbers.

The BRS lump-sum option

If you are under BRS, you have a one-time choice at retirement that High-3 retirees do not.

• You can take 25% or 50% of the present value of your pension as a lump sum up front.
• In exchange, your monthly pension is reduced by that same percentage until full Social Security retirement age (currently 67), then it returns to the full amount for life.
• The lump sum is fully taxable in the year you receive it, and it is discounted using a government rate, so the up-front amount is worth less than the payments you give up.

The lump sum trades lifetime pension value for cash now. Whether that trade fits your plans is your decision, and the official BRS calculator shows the lifetime numbers both ways.

Source: DoD Blended Retirement and Military OneSource.

The Survivor Benefit Plan (SBP) decision

Your pension stops the day you die, unless you elect SBP. This is one of the biggest decisions at retirement, and it is generally difficult to change once made.

• SBP turns part of your pension into a lifetime annuity for your survivor. You pick a base amount, from $300 up to your full gross retired pay.
• For spouse coverage, the premium is 6.5% of the base amount, deducted from your retired pay before taxes.
• Your survivor receives 55% of the base amount, monthly for life, with annual COLA.
• If you are married and take no action, you are automatically enrolled in full spouse coverage. Declining or reducing it requires your spouse's written, notarized consent, and the election is generally locked in after retirement.
• There is one limited opt-out window: you can cancel SBP during the 25th through 36th month of retirement, with your spouse's concurrence. It is exit only; you cannot use it to start coverage you declined. Certain other situations, such as a qualifying VA total-disability rating, can also allow withdrawal. Confirm current rules with DFAS before deciding.
• Premiums become paid-up after 30 years of payments and age 70.
• The old "widow's tax" is gone: since January 1, 2023, a survivor can receive full SBP and full VA DIC at the same time.

SBP is hard to match with commercial insurance, but the premium is real money every month. Weigh it on whether your survivor would depend on the income, and run it together before the out-processing desk, not at it.

Source: Defense Finance and Accounting Service, dfas.mil SBP.

VA disability and your retired pay

Retired pay and VA disability compensation come from two different systems, and how they interact can add up to real money.

• As a rule, you waive a dollar of retired pay for each dollar of VA disability you receive. Because VA compensation is tax-free, many retirees still come out ahead by taking it.
• CRDP (Concurrent Retirement and Disability Pay) restores that waived retired pay for retirees with 20+ years and a VA rating of 50% or higher. That is the common eligibility rule; special retirement categories (like Chapter 61 disability retirements) work differently, so confirm your situation with DFAS. It is automatic and taxable.
• CRSC (Combat-Related Special Compensation) is a separate, tax-free payment for disabilities that are combat related. It requires an application to your branch.
• You cannot receive CRDP and CRSC at the same time. You take the one that pays more, and you can switch once a year during open season.

Source: Defense Finance and Accounting Service, dfas.mil disability pay, and the VA.

TRICARE as a retiree

Unlike a member who separates without retiring, a retiree keeps TRICARE, though the cost and the plan change.

• Before 65, you choose TRICARE Prime or TRICARE Select, both of which carry enrollment fees and cost shares for retirees.
• At 65, with Medicare Part A and Part B, you move to TRICARE For Life, which acts as secondary coverage to Medicare.
• Your family's coverage follows similar rules, so build the premiums into your retirement budget.

Source: TRICARE. Confirm current fees and plan options at tricare.mil.

The retirement money timeline

• 12 to 24 months out: start TAP, request a retirement pay estimate, and begin the SBP conversation with your spouse.
• 6 to 12 months out: file your VA disability claim early through Benefits Delivery at Discharge, and decide TRICARE Prime vs Select for after retirement.
• At out-processing: complete DD Form 2656 to start retired pay and make your SBP election, and confirm your DD-214 is correct before you sign.
• First months retired: confirm your first retired-pay deposit and any CRDP or CRSC, and check that SBP and TRICARE are set up the way you elected.

While you plan your retirement: a note from StandWatch

Retirement reshapes your whole budget at once. StandWatch can keep an eye on your VA mortgage rate, auto loan, or savings APY for free and let you know if something moves, so one less thing needs watching while you sort out the big decisions. No cold calls, and we never sell your information as a lead. Setting a Watch is optional, and the decision always stays yours.

Frequently asked questions

How is my military pension calculated?
Under High-3 it is 2.5% times your years of service times your highest-36-months average basic pay, so 50% at 20 years. Under BRS the multiplier is 2.0% (40% at 20 years), offset by a TSP match of up to 5%. Both get an annual COLA.

Is the Survivor Benefit Plan worth it?
SBP guarantees your survivor 55% of your elected base amount for life, for a 6.5% premium, and it is inflation-adjusted and hard to match commercially. Whether it fits depends on whether your survivor would depend on that income. It is generally difficult to change after retirement (one limited cancellation window exists in the 25th through 36th month, with spouse concurrence), so run it together before you file.

Can I get both my pension and VA disability?
Normally you waive a dollar of retired pay for each dollar of VA disability. CRDP restores that waived pay for retirees with 20+ years and a VA rating of 50% or higher, and CRSC is a separate tax-free payment for combat-related disabilities. You cannot receive both at once.

Do I keep TRICARE when I retire?
Yes. Before 65 you choose TRICARE Prime or Select, both with retiree fees. At 65 with Medicare Part A and B you move to TRICARE For Life, secondary to Medicare.

Does this cover Guard and Reserve?
Reserve and Guard retirements are points-based and generally begin at age 60, and survivor coverage uses the Reserve Component SBP. Confirm your situation with your Retirement Services Officer.

Sources

• Retired pay and BRS: DoD Military Compensation and DFAS
• Survivor Benefit Plan: DFAS SBP
• CRDP and CRSC: DFAS disability pay
• TRICARE for retirees: TRICARE

Go deeper on the TSP: the match, funds, 2026 limits, loans, and exits live in the TSP Guide.

The real numbers: DFAS Retired & Annuitant Pay 800-321-1080 · VA benefits 800-827-1000 · TRICARE plan contacts at tricare.mil.

Figures and rules verified July 10, 2026. Program terms change over time. Always confirm at the official source and with your finance and retirement services offices. StandWatch is an independent resource for the military community, not affiliated with or endorsed by the VA, DoD, or any government agency. This guide is general information, not financial, tax, or legal advice.