Military Retirement Pay Guide: How It Works & How Much You'll Get (2026)

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Military retirement is one of the most valuable pension systems in America, providing lifetime income after just 20 years of service. Here’s how the Blended Retirement System (BRS) works.

Table of Contents

Blended Retirement System (BRS) Overview

The BRS applies to all service members who entered after January 1, 2018:

Component Detail
Defined benefit (pension) 2% × years of service × high-36 base pay
TSP government match Up to 5% of base pay
Continuation pay Lump sum at 12 years (2.5x–13x monthly pay)
Lump sum option Option to take 25% or 50% as lump sum at retirement

Military Retirement Pay by Rank (20 Years)

Rank High-36 Base Pay Monthly Pension (40%) Annual Pension
Enlisted
E-5 (Sergeant) $4,900 $1,960 $23,520
E-6 (Staff Sergeant) $5,600 $2,240 $26,880
E-7 (Sergeant First Class) $6,500 $2,600 $31,200
E-8 (Master Sergeant) $7,400 $2,960 $35,520
E-9 (Sergeant Major) $8,500 $3,400 $40,800
Officer
O-3 (Captain) $8,200 $3,280 $39,360
O-4 (Major) $9,200 $3,680 $44,160
O-5 (Lt. Colonel) $10,500 $4,200 $50,400
O-6 (Colonel) $12,000 $4,800 $57,600

Pension by Years of Service

Years of Service BRS Multiplier Monthly Pay (E-7) Monthly Pay (O-5)
20 40% $2,600 $4,200
22 44% $2,860 $4,620
24 48% $3,120 $5,040
26 52% $3,380 $5,460
28 56% $3,640 $5,880
30 60% $3,900 $6,300

Each additional year adds 2% to the multiplier.

TSP Government Matching

Your Contribution Government Auto (1%) Government Match Total Government
0% 1% 0% 1%
1% 1% 1% 2%
2% 1% 2% 3%
3% 1% 3% 4%
4% 1% 3.5% 4.5%
5% 1% 4% 5%
6%+ 1% 4% 5% (max match)

Always contribute at least 5% to get the full match — it’s free money.

TSP Growth Projections

Contributing 5% of base pay + 5% government match (E-7):

Career Length Total Contributions TSP Balance (7% return)
10 years $78,000 $110,000
15 years $117,000 $195,000
20 years $156,000 $320,000
25 years $195,000 $500,000
30 years $234,000 $750,000

If You Max TSP Contributions ($23,500 in 2026)

Career Length Total Contributed TSP Balance (7%)
20 years $470,000 $1,150,000
25 years $587,500 $1,700,000
30 years $705,000 $2,400,000

Total Military Retirement Package (E-7, 20 Years)

Component Monthly Annual Lifetime (age 40 to 82)
Pension (40% of high-36) $2,600 $31,200 $1,310,400
COLA adjustments (~2.5%/yr) Growing Growing ~$2,000,000+
TSP balance (5% + match) — — $320,000
VA disability (if eligible, 30%) $524 $6,288 $264,096
TRICARE (retirement healthcare) -$50 -$600 Saves ~$500K+ vs civilian
Total package value $3,500,000+

The total value of military retirement with TRICARE easily exceeds $3.5 million.

Continuation Pay

A one-time bonus at the 12-year mark:

Service Multiplier (Active Duty) Multiplier (Reserve)
Army 2.5x – 13x monthly base pay 0.5x – 6x
Navy 2.5x – 13x 0.5x – 6x
Air Force 2.5x – 13x 0.5x – 6x
Marines 2.5x – 13x 0.5x – 6x

For an E-7 at 12 years (~$5,800 base pay), continuation pay ranges from $14,500 to $75,400 depending on the multiplier offered.

Lump Sum Option at Retirement

At retirement, you can take 25% or 50% of your pension as a lump sum:

Option Monthly Pension (E-7 at 20yr) Lump Sum Received Reduced Pension Until Age 67
No lump sum $2,600 $0 $2,600
25% lump sum $1,950 ~$200,000 $1,950 (then $2,600 at 67)
50% lump sum $1,300 ~$400,000 $1,300 (then $2,600 at 67)

⚠️ The lump sum is calculated using the personal discount rate, which is often unfavorable. Most financial advisors recommend against the lump sum option.

COLA (Cost of Living Adjustment)

System COLA Formula
BRS CPI – 1% (until age 62, then full CPI catch-up)
Legacy (pre-2018) Full CPI annually

BRS COLA Impact Over Time

Year of Retirement Pension (no COLA) Pension (BRS COLA) Pension (Full CPI)
Year 1 $2,600 $2,600 $2,600
Year 5 $2,600 $2,710 $2,870
Year 10 $2,600 $2,830 $3,280
Year 15 $2,600 $2,955 $3,750
Year 20 $2,600 $3,085 $4,290
Age 62 (catch-up) $2,600 $3,750 (catches up) $4,290

TRICARE in Retirement

Plan Monthly Premium Coverage
TRICARE Prime (under 65) ~$50/month (family) Full HMO-style coverage
TRICARE Select (under 65) ~$100/month (family) PPO-style, more flexibility
TRICARE For Life (65+ with Medicare) $0 (beyond Medicare premium) Medicare + TRICARE supplement

A civilian family pays $800-$1,500/month for comparable coverage. TRICARE saves $12,000-$18,000/year.

Military Retirement vs Civilian

Feature Military (BRS, 20 years) 401(k) Only Federal Employee (FERS)
Pension Yes (40% of high-36) No Yes (1.1% × years)
COLA on pension Yes (CPI-1%) N/A Yes (partial)
Government match 5% TSP match 3-6% match (typical) 5% TSP match
Healthcare in retirement TRICARE (~$600/yr) $12,000-$18,000/yr FEHB (~$4,000/yr)
Full retirement age Any (at 20 years, often age 38-42) 59.5+ 62+ (with 5 years service)
Lifetime value $3,500,000+ $1,000,000-$2,000,000 $1,500,000-$2,500,000

States That Don’t Tax Military Retirement

State Tax Treatment States
No income tax Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
Fully exempt military retirement Alabama, Arkansas, Connecticut, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, West Virginia, Wisconsin
Partially exempt Colorado, Georgia, Kentucky, Maryland, Oregon, South Carolina, Virginia
Fully taxed California, Vermont

Key Takeaways

  1. BRS provides 2% × years of service — 40% of high-36 at 20 years
  2. Always contribute at least 5% to TSP — get the full 5% government match
  3. An E-7 retiring at 20 years gets ~$2,600/month pension plus TSP savings
  4. Total military retirement value exceeds $3.5M including pension, TSP, TRICARE, and COLA
  5. TRICARE alone saves $12,000-$18,000/year compared to civilian health insurance
  6. Most states don’t tax military retirement pay — choose your state wisely
  7. Avoid the lump sum option — the discount rate is usually unfavorable
  8. Maxing TSP at $23,500/year over a 20-year career could build $1.15M+
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