There are three different military retirement plans for US military retirees. The military plan is assigned to / chosen by a US Army retiree based on the date of joining the US Army. There is a military retirement calculator for every military retirement plan. There are a set of variables (such as tax rate, inflation rate, interest rate, current savings, etc) that must be input into the calculator to get main parameters of one’s retirement.
The military retirement plans are:
Final Pay military retirement plan is for those military retirees that joined the US Army before September 8, 1980. Those who joined later are not allowed to retire under Final Pay retirement plan. According to this plan a military retirement calculator works in the following way: it multiplies the number of years at the active service in the army by 2.5 percent (note that the product cannot be more than 75 percent) and afterward it multiplies the product by final base pay of an individual. Any allowances or benefits must be also accounted while making the calculations to get an accurate picture.
So to say this in another words a person that served at US Army for 20 years, he /she shall get 50 percent of its final base pay. This share gradually increases as the number of years served at the US Army increases. On the other hand, the share of the final base pay cannot exceed 75 percent. So those individuals, who served ore than 30 years, will get the same share from their final base pay as those, who served at the US Army exactly 30 years.
High 3 Years Average military retirement plan is designed for those people who joined the army during the period September 8, 1980 – August 1, 1986 or after August 1, 1986. This plan is in many ways like the Final Pay retirement plan. According to this plan a military retirement calculator multiplies number of years served at the US Army by 2.5percent (the maximum for this product is 75 percent) and the product is then multiplied by average base pay for any 36 months of an individual’s career, when he /she had the highest base pay. Usually it turns out that these 36 months (3 years) are the last years of an individual’s military service. The product of these two numbers is the pension that a military retiree shall get after he /she gets retired from the US Army.
Redux (Career Status Bonus) is quite a specific military retirement plan that differs from first two retirement plans substantially and is discussed in a separate article on our site. It is needless to say that Redux plan requires different military retirement calculator.