REDUX, the newest addition to the military retirement system, was revised by the FY2000 National Defense Authorization Act with a $30,000 Career Status Bonus (CSB) awarded to REDUX service members.
Before they were famous, many truly influential men and women started by serving their country in the US military or grew up in military families.

A Brief Overview of Active Duty Military Retirement Systems

Posted:

How will your retirement plan support you once you're actually retired? Here's a quick look at understanding your military retirement options and your military retirement pay.

The three non-disability retirement systems available for military service members who meet their 20 + year service requirement are: Final Pay, High-3 Year Average, and Military Retirement Reform Act of 1986 (REDUX).

REDUX, the newest addition to the military retirement system, was revised by the FY2000 National Defense Authorization Act with a $30,000 Career Status Bonus (CSB) awarded to REDUX service members. Military service members already using REDUX now have the option of High-3 and CSB/REDUX systems.

CHOOSING YOUR MILITARY RETIREMENT SYSTEM

Eligibility and ability to choose between the three military retirement systems depend upon certain factors including the date when you first entered the military, or DIEMS. This date is also referred to as DIEUS, or Date of Initial Entry to Uniformed Services.

The date you first entered the military as a service member is counted as the first time you enlisted, whether you joined the active military or reserves. Your DIEMS is fixed and does not change based upon your date of departure from the military.

DETERMINING YOUR DIEMS

Your military DIEMS start from the first date you join any military service, rather than completion of any military preliminary program.

For example, service members who first joined the Reserves and later joined the active component will count their DIEMS from the date they joined the Reserves. Service members on an ROTC scholarship, Academy graduates, and delayed entry programs will all start their DIEMS from the date of enlisting rather than graduation.

Also service members who entered the military, separated, and then rejoined the military have their DIEMS based on entering the first period of military service.

In addition, your military pay date may differ from your DIEMS. Your DIEMS only determines which retirement system applies to you, not the length of service for completing your retirement eligibility. FINAL PAY MILITARY RETIREMENT SYSTEM Final Pay applies to military service members who began serving prior to September 8, 1980, and counts each year of military service as 2.5% toward the retirement multiplier.

For example: 2.5% x 20 years of service = 50%; 2.5% x 30 years = 75%. The longer a military service member serves on active duty, the higher the multiplier and retirement pay, with 75% as the maximum percentage.

HIGH-3 YEAR AVERAGE MILITARY RETIREMENT SYSTEM

The High-3 Year Average retirement system applies to military service members who began serving after September 8, 1980 and before August 1, 1986. Similar to Final Pay, for High-3 Year Average each year of service is worth 2.5% toward the retirement multiplier. For military service members participating in High-3, a 50% - 75% multiplier is applied against your average basic pay for the highest 36 months of your military service. Cost of Living Adjustments (COLAs) are factored in every year based on inflation, as measured in the Consumer Price Index (CPI). In the High-3 system, the annual COLA is equal to CPI, differing from the index used to determine active duty pay raises.

REDUX MILITARY RETIREMENT SYSTEM

The Military Reform Act of 1986 created the REDUX retirement system, which can be accepted by service members who joined on or after August 1, 1986.

Under REDUX, every year in your first 20 years of service is worth 2.0% toward the retirement multiplier, and each year after the 20th year is worth 3.5%. Just as in High-3, your multiplier is applied against the average basic pay for the highest 36 months of your basic pay, without applying to allowances or special pay.

REDUX provides bonuses, including a return to the High-3 multiplier and a $30,000 Career Status Bonus, boosting retirement cash for investing, or setting up a business after retirement.

The REDUX multiplier calculation and annual cost of living adjustments differ from the other systems. REDUX comes with a readjustment feature that brings the REDUX retired pay back to the same amount paid under the High-3 System, beginning from age 62. However, REDUX COLAs for later years will again be set at CPI minus 1%.



RELATED ARTICLES:


Sponsor:

VA Loans for Veterans
Complimentary VA loan pre-approvals will give you the comfort you need to shop for your home with confidence. VA refinance loans available.


VA Home Loans

Military Hub is not a government website and is not affilitated with any branch of the U.S. Military.


Support Our Troops:

Semper Fi Fund
The Semper Fi Fund provides financial assistance and support to service members and their families.
IAVA - Iraq and Afghanistan Veterans of America
IAVA is the nation's largest nonprofit, nonpartisan organization representing veterans and their families.
Team Rubicon
Team Rubicon unites the skills and experiences of military veterans with first responders.
Pat Tillman Foundation
The Pat Tillman Foundation invests in military veterans and their spouses through educational scholarships.

About Military Hub
Privacy Policy
Contact / Advertise

Copyright © 2008 - 2017
Advertise Military, LLC
All Rights Reserved

Disclaimer: MilitaryHub.com and MilitaryRates.com are private websites that are not affiliated with the U.S. Department of Veteran Affairs, any U.S. government agencies, or any U.S. military branches. Our sites contain basic information about veteran benefits, pay tables, current events, and news for active duty military personnel, military veterans, and their families. You can find additional information on these topics at the official website for U.S. Department of Veteran Affairs.