Military Pilot Retirement – Guard and Reserve

Welcome back to our series on Military Pilot Retirement pay. In Part 1 we discussed retirement for Active Duty pilots. In this part we’ll discuss retirement pay for Guard and Reserve pilots.

Table of Contents

  1. Background
  2. Let’s Run The Numbers
  3. Marginal Utility
  4. What is an Hour of Your Life Worth?
  5. It’s Not All About the Money!


In essence, a Reserve (or Guard) retirement pays the same as an Active Duty retirement. You receive 2% of your base pay, times the number of years you served. (The newer Blended Retirement System gives you 2%. If you’ve already been serving for a long time, you may still be under the old retirement system that pays 2.5% of base pay.) If a pilot served for 20 full years, his or her retirement pay would equate to 40% of base pay (under the BRS), or 50% of base pay under the legacy retirement system.

Remember though, we’re dealing with the US government, so everything is extra complicated for a Reserve retirement. Since most reservists don’t work 365 days per year, the government doesn’t want to give you credit toward a full year’s worth of retirement pay for each year of your Reserve military service. They convert the total number of days (pay periods) that you served and divide them by 360 to come up with a number of equivalent full-time years for your service.

(Yes, in most cases, you should log 2 pay periods for each day that you work as a Reservist. However, to prevent good deals, the rules say that you’re not allowed to log more than 360 points per year.)

The resulting equation looks like this:

Years of Service = Points Earned ÷ 360

If you spent 20 years on full-time Reserve orders, you would earn 7200 points and the equation solves as:

20 Years of Service = 7200 Points ÷ 360

Most reservists won’t accrue 7200 total points. The bare minimum any reservist could expect to earn per year is:

48 Points for attending monthly drill (12 weekends, at 2 points per day)
15 “Participation” Points (awarded just because you’re in the Guard or Reserves)
+ 15 Annual Tour Points (essentially the “two weeks in the summer” tagline)
78 Total Points

Most pilots will earn more points than this each year through the necessity of keeping current in your aircraft. For our calculations, we’ll assume a pilot earns roughly 200 points per year (15 for participation, 48 for drill, and then earns 2 points a day for roughly one week of flying per month).

It’s also worth noting that service on Active (full-time) orders only earns you one point per day worked. We’ve mentioned that a pilot who starts his or her service in the Guard or Reserves will probably spend this first 2-4 years on full-time orders. This pilot will receive 360 retirement points per year during that time.

A pilot who transitions from Active Duty to the Guard or Reserve also receives 360 points per year of full-time service. Since most pilots won’t have the option of doing this until the 11-12 year mark, they can expect to start off in the Guard or Reserve with 3,960 – 4,320 points.

An Active Duty retirement is an all-or-nothing deal that kicks in after 20 years of service. The military also requires 20 years of service from its Guard and Reserve pilots, but there’s a lower limit to how lazy you can be. In order for each year of your service to count, you must log at least 50 retirement points. The government refers to this as a “Good Year.” Since each pilot gets 15 points just for participating, he or she could theoretically get by earning 35 points from actual work. Since each point represents 4 hours of work, this equates to a grand total of 140 hours of work in a year. This shouldn’t be difficult for most pilots, and we’ve already decided that the average pilot will earn closer to 200 points each year.

Unfortunately, there’s one more big gotcha that we have to address here: Although Active Duty retirees start collecting monthly checks as soon as they retire, Guard and Reserve retirees don’t get a dime until they reach age 60! If you pursue the Ultimate Military Pilot Career Path by enlisting at age 18, you could accrue 20 Good Years by age 38. No matter how valiant your service was, you’ll have to wait 22 years before you get your first retirement check. (There are some small loopholes here. The date you start collecting retirement moves one day earlier for each day that you spent deployed, with some stipulations.)

With this background, we can start toward calculating what a pilot’s monthly check will be in retirement.

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Let’s Run The Numbers

We decided that a pilot who starts as a “Guard Baby” (no active duty experience) should have about 3 years on full-time orders worth 1080 retirement points. After that, we’ll plan for this pilot to accrue another 17 Good Years by earning an average of 200 points per year. That means this pilot expects to earn a career total of roughly 4,480 points. Here’s a summary:

1080 (3 years x 360 points per year)
+ 3400 (17 years x 200 points per year)
4480 total retirement points

We’ll also consider the case of a pilot who transitioned to the Guard or Reserve after 11 years on Active Duty. His or her points look like this:

3960 (11 years x 360 points per year)
+ 1800 (9 years x 200 points per year)
5760 total retirement points

Next, we have to convert these values to equivalent years of full-time service, dividing total points by 360:

Guard Baby Active Duty Transition
Total Retirement Points 4480 5760
Divide by 360 360
Equivalent Years of Service 12.4 16

We multiply the value for equivalent years of service by either 2% (BRS) or 2.5% (legacy retirement system) to get what the military calls a “Service Multiplier.” The pilot transitioning from Active Duty could potentially fall under either system, while a Guard Baby starting out today will definitely fall under the BRS.

Guard Baby (BRS) Transition Pilot (BRS) Transition Pilot (Legacy)
Equivalent Years of Service 12.4 16 16
Retirement Percentage 2% 2% 2.5%
Service Multiplier 24.8% 32% 40%

We apply the Service Multiplier to the monthly base pay that each pilot will be earning on the day he or she retires. (I’ll also add a row that shows annual retirement pay to save you some math.) Although a pilot could retire at a variety of ranks, we’ll limit our calculations by showing what he or she would earn as an O-4, or as an O-5.

Here are the O-4 numbers:

O-4 Retirement Pay Guard Baby (BRS) Transition Pilot (BRS) Transition Pilot (Legacy)
Monthly Pay Rate $8,073.90 $8,073.90 $8,073.90
Service Multiplier 24.8% 32% 40%
Monthly Retirement Pay $2,009.50 $2,583.65 $3,229.56
Annual Retirement Pay $24,114 $31,003.80 $38,754.72

And here’s what this pilot would get after retiring as an O-5:

O-5 Retirement Pay Guard Baby (BRS) Transition Pilot (BRS) Transition Pilot (Legacy)
Monthly Pay Rate $9,243.60 $9,243.60 $9,243.60
Service Multiplier 24.8% 32% 40%
Monthly Retirement Pay $2,300.63 $2,957.95 $3,697.44
Annual Retirement Pay $27,607.56 $35,495.40 $44,369.28

Overall, this reserve retirement is a good deal. We should be thankful that we have the ability to earn this taxpayer-funded benefit. Who wouldn’t love to get a check for thousands of dollars each month for doing nothing? Don’t forget that this retirement also gives a pilot access to extremely cheap health insurance. However, unless you’re as badass as my hero, Mr. Money Mustache, a reserve retirement may not be enough to support you for the rest of your life. (Also, don’t forget that you won’t even start receiving these checks until age 60 or so.)

Before we conclude, I want us to take a look at this benefit from another perspective. First, we need to review a very important concept from the discipline of economics.

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Marginal Utility

I don’t know about you, but I love pizza. Is there anything better than taking a bite of pizza after a long day when you felt like you were starving? It’s pretty amazing, right? The next bite is also amazing, but maybe slightly less so. In fact, each subsequent bite and each subsequent slice of pizza brings you just a little less enjoyment than the last one. This principle is what economists call Marginal Utility…the idea that a thing’s value decreases as you have more of it.

If you go on eating slice after slice of pizza, you’ll eventually get full. From that point, eating another slice really doesn’t have much value for you at all. Keep going and you’ll actually reach a point where each additional bite has a negative value.

You probably already knew all of this, but I want it to be fresh in your mind as we ask our next question:

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What is an Hour of Your Life Worth?

Each of us has a limited number of hours on this planet. When we go to work, we’re trading those hours for money. Vicki Robin and Joe Dominguez wrote a fascinating discussion of this idea in their book, Your Money or Your Life. How much do you value those hours of your life? How much compensation do you need to give one up?

It turns out that it’s not too complicated to calculate the value that the military places on our time. We’re going to look at those numbers here, then ask ourselves whether that compensation is adequate.

We’ll again run numbers for retiring both as an O-4, and as an O-5. (We’re going to base everything on the new BRS. If you still fit under the legacy retirement system, just take any of our final solutions and multiply by 1.25.)

We start our calculations by assuming that a pilot has earned a full 7200 points. (Don’t worry that few Reservists reach this mark. We’ll eventually divide by the same number to get a dollars per point value.) Let’s recalculate monthly retirement pay for a pilot at each of these ranks:

O-5 O-4
Monthly Base Pay $9,243.60 $8,073.90
Retirement Points 7200 7200
Service Multiplier 40% 40%
Monthly Retirement Pay $3,697.44 $3,229.56

Next, we’ll divide monthly retirement pay by the total number of retirement points earned to get a “dollars per point” value. Knowing that each point equates to a single four-hour pay period, we can divide our dollars per point value to get a dollars per hour rate.

O-5 O-4
Monthly Retirement Pay $3,697.44 $3,229.56
Divide by 7200 points 7200 7200
Dollars per point $0.51353 $0.44855
Divide by 4 hours per point 4 4
Dollars per hour $0.12838 $0.11214

What this boils down to is that for every hour you worked as a Guard or Reserve pilot, your monthly retirement check increased by almost 13 cents if you make O-5, or just over 11 cents if you make O-4.

It would not, however, be fair to say that a Reserve pilot works for just over a dime an hour. We have to consider a pilot’s total lifetime compensation. Time for some more math!

Let’s assume that a Guard or Reserve pilot starts collecting pension checks at age 60 and lives to be 100. This means he or she will collect 480 monthly checks over the course of 40 years. (I’m sure that the average life expectancy for a military pilot is well short of 100 years, but we’re going to use this number anyway. It’ll help emphasize the point of our eventual conclusion.)

Since we know the size of this pilot’s monthly check, we can calculate lifetime retirement pension payouts over those 480 months. To this, we’ll add the base pay, flight pay, and government TSP match that a pilot receives for each hour that he or she serves as a Reservist right now. We can then reduce this total back down to a “lifetime compensation per hour worked” value.

That value will change, depending on a pilot’s rank and years of service. We’ll look at three different points in a pilot’s career.

  • Case #1 will be a senior pilot, an O-5 with 18 years of service, who is going to retire as an O-5.
  • Case #2 will be a 12-year O-4 who just transitioned from active duty and who is going to retire as an O-4.
  • Case #3 will be a Guard Baby, an O-2 with just 3 years of service so far, who is going to retire as an O-5.

Let’s start by looking at the current pay rates for each of these officers. We’ll divide the monthly total by 30 pay periods to get a “dollars per pay period” value, and we’ll divide that by 4 to get a “dollars per hour” value.

Current Pay Rates O-5 (18 Yrs) O-4 (12 yrs) O-2 (3 yrs)
Base Pay $8,998.50 $7,596.30 $4,818.30
TSP Match $449.93 $379.82 $240.92
Flight Pay $1,000.00 $1,000.00 $250.00
Immediate Pay Period Compensation Subtotal $348.28 $299.20 $176.97
Immediate Hourly Compensation Subtotal $87.07 $74.80 $44.24

Based on earlier calculations we know how much each of these pilots received per point per month in retirement. We can multiply that value by 12 to find out how much the pilot earns per year per retirement point, and we are assuming that the pilot collects this pay for 40 years:

O-5 at Retirement O-4 at Retirement
Monthly Retirement Pay Per Point $0.51353 $0.44855
Annual Retirement Pay Per Point $6.16 $5.38
Years Collecting Pension 40 40
Lifetime Retirement Pay Per Point Subtotal $246.50 $215.30
Lifetime Retirement Pay Per Hour Subtotal $61.62 $53.83

We now combine each pilot’s current compensation and total retirement earnings to find a value for “lifetime dollars earned per hour worked:”

O-5 (18 Yrs) O-4 (12 yrs) O-2 (3 yrs)
Immediate Hourly Compensation Subtotal $87.07 $74.80 $44.24
Lifetime Retirement Pay Per Hour Subtotal $61.62 $53.83 $61.62
Lifetime Dollars Earned Per Hour Worked $148.69 $128.63 $105.87

The bottom line of that chart is exactly how much the US military values an hour of your life when you go to work at your home station.

Compared to the Bernie Sanders supporters who are rioting over a $15/hr minimum wage, Guard and Reserve pilots do pretty well. How does that compare to other pilot jobs though?

I came up with the effective daily pay rate I earned as a Year 3 B717 First Officer at Delta. This number ended up being $1,256 per day. If we consider that the minimum daily guarantee for a Delta pilot is 5 hours and 15 minutes of pay, this $1,256 equates to no less than $239.24 per hour or just over $90 per hour more than the highest-paid Guard or Reserve O-5 pilot.

Of course, this is only Year 3 pay on a scale that tops out at 12 years, and the B717 is the lowest-paying aircraft at my company. Captain’s pay starts at just under double this figure and tops out at nearly triple on the A350 or B777. These figures only reflect regular pay. If a pilot decides to pick up extra flying for premium pay, everything doubles again.

Let’s also remember that most military pilots will spend at least part of their careers deployed. When you deploy you’re essentially working 7 days a week, and each day involves far more hours at work than when you’re back at home. However, since you’re on full-time orders when you deploy, you’re only getting one single, solitary point per day of work. At home you earned one point per 4 hours of work, but deployed you’re closer to 1 point per 12 hours of work. This means your effective hourly rate is only 1/3 of the numbers we just calculated.

(To be fair, you do get BAS, BAH, hazardous duty pay, tax-free pay, and some other benefits while you’re deployed. I’m not going to dig into that much detail here. I’d settle with the conclusion that a deployed Guard or Reserve pilot’s effective hourly rate is 1/2  of the numbers above.)

Now that we have these numbers staring us in the face, let’s think back to our discussion of marginal utility. As a Guard or Reserve pilot, you will have the option of picking up extra days of work at your unit. Most of the time, that will earn you two whole points. Now that you know the lifetime economic value of each of those points, what is the marginal utility of putting in an extra day at your unit? If you’ve taken the Ideal Military Pilot Career Path and landed a seniority number at a major airline, how does the marginal utility of putting in an extra day at your military unit compare to the marginal utility of putting in an extra day at your airline?

In the context of the question we asked at the start of this section: is $105-148 adequate compensation for an hour of your life? (Let’s not forget that this all assumes you live to be 100 years old. Your lifetime Guard or Reserve compensation decreases slightly for every year you fall short of that mark.)

Given the choice between trading an hour for <$149 or trading an hour for >$239, what is better for your family’s long-term well being?

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It’s Not All About the Money!

I’ll admit I’m not being very subtle about the point I’m trying to make. From a purely financial standpoint, I believe that you and your family are far better off if you give your military unit the absolute least amount of time you can, and use every other hour of your life that you allocate for work to earn money at a major airline. If you care about your family’s long-term financial well-being, I assert that a major airline pilot almost can’t justify any full-time military work. Every day you spend playing Maverick costs your family thousands of dollars.

And yet, I think it’s also important to note that money isn’t everything. I derive value from giving service to my country, from feeling that I get to help defend it. I don’t do any military flying anymore, but I derived incredible value from that flying in the past.

I just got back from the EAA Airventure at Oshkosh. One of the highlights of that show is getting to walk through row after row of meticulously maintained warbirds, and watching those aircraft fly every afternoon. The civilian pilots who care for and fly those aircraft pay hundreds or thousands of dollars an hour for the privilege. (And I feel like every penny they spend is put to good use!)

However, as current military pilots, we get to fly aircraft with performance that puts even the fanciest P-51 or B-17 to shame. In many cases, we get to employ those aircraft on real-world missions that are as exciting as they are meaningful. Frequently, our bosses tell us to go fly a bunch of hours in these aircraft for training because we have to use the hours up by the end of the year. You will never again get such a great deal on flying in your life. I truly miss getting those good deals.

There is significant value to the flying and service we get to do as military pilots. While I believe the financial side of things clearly favors airline work over military service, I assert that the right military flying job may be worth giving up some of that airline pay.

One last point here is that if you’re trying to decide where you’re best off spending your time, I recommend making an honest assessment of how much flying you’ll get to do in your future military service. One of the biggest reasons I tell Active Duty pilots to leave for the Guard and Reserves ASAP is that as a pilot gets more senior in rank, he or she spends less and less time flying. An Air Force Major likely has to attend Air Command and Staff College, then complete a 3-year staff tour. Those assignments involve little to no flying. An Air Force Lieutenant Colonel’s job is to attend staff meetings, complete Air War College, and possibly do another staff tour. Again, not much flying to be had there.

For many officers, these non-flying jobs are engaging and fulfilling. For some, they’re valuable enough to justify giving up the money of an airline job. However, for me, there’s no contest. Unless I’m doing amazing military flying, I’m far better off earning amazing money flying at an airline than gouging my eyes out in a cubicle.

Thankfully, the Guard and Reserve will allow a pilot to get more flying for less office work. A part-timer can generally only get paid when he or she is flying for work, so there’s not much opportunity to spend time on the unfulfilling stuff.

If you’re a full-timer in the Guard or Reserve, I hope this article has opened your eyes a bit. I hope you’ll take the time to ask yourself how much you’re enjoying your job and how much you’re getting to fly. You now know the marginal utility of each additional day you spend on military work. I hope you’ll consider whether the monetary compensation the military is giving you represents a fair exchange for the hours of your life. If not, I highly recommend you look into major airline opportunities. You can truly have the best of both worlds. You can get an airline seniority number and earn great money for your family while preserving your access to fun and fulfilling military flying.

I believe that a Guard or Reserve retirement is worth pursuing no matter what. It’s a virtually guaranteed income stream in case all else fails. It gives you access to incredibly cheap health insurance. It gives you an excuse to continue enjoying great military flying. And, if you balance your time well, you can earn this retirement while you make even better money and accrue seniority at an airline. A Guard or Reserve retirement may be one of the few circumstances in this world where you truly can have it all!

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