Understanding the Reserve Retirement System

The potential of receiving a pension is one of the many benefits of a career in the Air National Guard and Air Force Reserve. Understanding the reserve retirement system and figuring out your final retirement pay can be a challenge. BogiDope is here to help with a quick 30,000 ft over-view of reserve retirement and how to calculate your reserve retirement pay.

How Do I Qualify? 20 “Good Years”

To be eligible for a reserve retirement you need 20 qualified years of service commonly known as “good years.” In order to complete a “good year” a member of the reserves needs to accumulate at least 50 points for retirement.  Those points may be earned as follows:

• 365 points for a year of active duty
• 15 points for being a member of the reserves
• 1 point for each Unit Training Assembly (UTA or “drill”) period attended
• 1 point for each Additional Flight Training Period (AFTP)
• 1 point for each day of active duty orders
• 1 point for each Inactive Duty Period
• 1 point for every 3 credit hours earned upon completion of an accredited correspondence course

If you min roll your duties as a guardsman you’ll get 125 retirement points per year (15 membership, 48 UTAs, 48 AFTPs and 14 AD Days). Get 20 “good years” of service with at least 50 points and become eligible for a reserve retirement. Once you reach this milestone, you’ll receive your “20 Year Letter” from the secretary of your branch of service notifying you of your eligibility to receive retirement pay at age 60. You can reduce that age by one year for every 90 days of qualifying active duty served in a fiscal year after 2008, but in no case can you receive retirement pay earlier than age 50.

Time to Retire! Separate or Retired Reserve

So you’ve got your 20 “good years” (or more) and have decided it’s time to hang up your flight suit. Time to retire! While you are awaiting your retirement pay your unit will separate you from the reserve. You do have the option to request a transfer to the Retired Reserves. As a member of the Retired Reserve you won’t have any additional responsibilities, but your Retired Base Pay will be higher. I highly recommend transferring to the Retired Reserve. Your Retired Base Pay continues to increase because it will be calculated based on the pay scale (rank and years of service) that is current during the 36 months prior to you receiving your retirement pay.  In other words, every time time the military receives a pay raise between the time you transfer to the Retired Reserves and the time you reach 60, you benefit from that pay raise.  If you simply separate, your retirement pay will be locked in on the pay scale for the 36 months prior to your separation.

What’s it Worth? Service Percent Multiplier 

Your Gross Reserve Retirement Pay is calculated by multiplying your Service Percent Multiplier by your Retired Base Pay. Your Service Percent Multiplier is 2.5% times years of active service. To calculate your years of active service as a reservist, take your total retirement points and divide by 365.

To illustrate this, we’ll use me as an example. I retired from the Air Force Reserve in 2017 as an O-5 with 22 “good years” and I was 44 years old. Between my time on active duty, in the Air National Guard and in the reserves I accumulated 5510 retirement points and transferred to the Retired Reserve. To determine my Service Percent Multiplier:

Active Service = 5510 / 365 = 15.09

Service Percent Multiplier = 15.09 x 2.5% = 37.7%

To determine how many points earned over your military career, you have to reference your Point Credit Accounting & Reporting System (PCARS).  This document can be found here.  Then select “Self Service Actions” and then “Personal Data”.  Finally, select ANG/USAFR Points Credit Summary Inquire.

Retired Base Pay (High 3) 

For the second half of the equation, you’ll need to know your Retired Base Pay.  The “High 3” plan applies to those reservists that entered active or reserve military service after September 7, 1980. Retired Base Pay is the average of the highest 36 months of basic pay.

Here is the 2017 DFAS Pay Charts for an O-5:

               Over 20          Over 22           Over 24            Over 26            Over 28           Over 30

O-5             8,798.10         9,062.70           9,062.70             9,062.70           9,062.70            9,062.70

My Gross Reserve Retired Pay will be 37.7% of my average monthly base pay for 2028-2030. By contrast, had I elected to separate in 2015, my Gross Retired Base Pay only would be 37.7% of my average monthly base pay for 2013-2015.

Putting it All Together

In this first example lets look at a member who separated at 22 years of service as an O-5.  Remember this individual’s retire paycheck is based on his last 36th months of service.

Referencing the table above we can determine his last 3 years of Gross Retired Base Pay:

                           Year 20                Year 21               Year 22             Average

 O-5                   8,798.10               9,062.70             9,062.70           8,974.50

So now we know his Retired Base Pay over the last 36 months, $8,974.50.

Now we multiply Gross Retired Base Pay times his Service Percent Multiplier to determine Gross Reserve Retirement Pay.

$8,974.50 x 37.7% = $3,383.38

Therefore the monthly Gross Reserve Retirement Pay would be $3,383.38. 

Ok now lets switch gears and give the example in reference to someone who transfers to the Retired Reserves. Remember in this case the Gross Reserve Retirement Pay is based on the Retired Base Pay when it is collected at age 60.

So lets figure out what the new Retired Base Pay will be based on a conservative 2% annual salary increase until age 60. To keep this simple, we will use an increase of $175 to each year’s Retired Base Pay. 

           Year 2031           Year 2032           Year 2033         Average

O-5      11,248.10            11,687.7             11,862.70         11,599.50

So now we know the Retired Base Pay over the last 36 months (2% annual increase), $11,599.50.

Now we multiple Gross Retired Base Pay times his Service Percent Multiplier to determine Gross Reserve Retirement Pay.

$11,599.50 x 37.7% = $4,373.01

Therefore the monthly Gross Reserve Retirement Pay would be $4,373.01.

New Blended Retirement

Starting in 2018, some members of the Guard and Reserve will have the opportunity to transition to the new Blended Retirement System. This option combines part of the traditional retirement system with a lower percentage (2.0% vs the 2.5% used in the example above) and a contribution from Uncle Sam to an member’s Thrift Savings Plan (TSP). Get specific details on the Blended Retirement plan here.

Conclusion

I hope you guys have enjoyed this look at the Reserve retirement system.  Its a great perk you can take advantage of.  There are not many jobs in the world where you can do what you love part-time and still get a pension.  Remember the system can always change and each person’s situation is different.  Use the info from this article to arm yourself for calculating your own retirement in the future. If you enjoyed this article and want to compare the active duty benefits, check out our article on the active duty military retirement system.