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How to Use the High-3 and Final Pay Military Retirement Calculators

7 minute read Aug. 26, 2024
service member celebrates retirement

If you’re an active-duty service member who joined before 1986, then you may be considering retirement with a military pension. But, do you know how much that pension will be?

You can get a solid estimate in less than five minutes using free retirement pension calculators for the High-36 and Final Pay legacy retirement systems offered by the Defense Department. Here’s how to use them — and what you can do to adjust the outcomes to fund your future retirement lifestyle.

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How to use the High-3 military retirement calculator

If you joined between Sept. 8, 1980 and July 31, 1986, you can use the High-3 Calculator to figure out your estimated base pay. This retirement plan offers a pension after 20 years of service that equals 2.5% of your average basic pay for your three highest-paid years or 36 months for each year you serve. That’s why the plan is sometimes called the “High-36.”

For example, retiring with 20 years of service means your retirement pension will be 50% of the highest 36-month pay average. Waiting to leave after 40 years will make your pension 100% of your monthly pay average.

You may also receive additional payments from your Thrift Savings Plan, if you have chosen to contribute.

Here’s how to use the High-3 calculator to see your total projected retirement payments.

Select whether you are currently “Active Duty” or part of the “Reserve Component,” then choose whether you expect to retire from active or reserve duty. To illustrate here, we’ll assume retirement straight from active duty.

Then, press “Get Started.”

In this step, you’ll put in:

  • Your birth date
  • Your pay entry base date — Typically, the month and year you first got paid by the military. This can be found on your LES.
  • Your current pay grade
  • Your active service date — The month and year you first went on active duty, which might be the same as your pay entry base date
  • The number of years you’ll serve before you plan to separate or retire. It’s okay if you’re not sure — just put in your best guess.

Once you’ve put in your answers, press “Continue.”

For this step, you might not know the answers now. Many of these boxes are pre-filled with the most common responses. Try starting with the suggested common responses. You can always customize the responses through drop-down menus.

You’ll enter your:

  • Life expectancy
  • TSP withdrawal age — How old you’ll be when you decide to start withdrawing money from your TSP account. This defaults to 67, the assumed “Full Retirement Age,” but you can start withdrawing at 59½ years without paying extra income taxes. The longer you can wait to withdraw, the more money you’ll earn.
  • TSP contribution rate — How much you contribute to your TSP while you’re serving, as a percentage of your basic pay. This defaults to 5%. However, you can increase or decrease this amount if you plan on deducting more or less money from your monthly pay.
  • TSP rate of return — How much extra money you think your retirement account will make each year before you start withdrawing from it. This defaults to a 7% average annual increase. You can decrease this percent for a more conservative estimate and a lower future TSP payment. Or, you can increase it if you think the market will perform better by the time you withdraw your funds.
  • TSP rate of return after withdrawal — How much you think your account will make each year after you begin to withdraw. This defaults to 3%.
  • Current TSP account balance — You can find this information online at the official TSP website.

After you have made your choices, click “Continue.”

Remember: your highest 36 months of basic pay determines your eventual pension rate. So, the calculator asks what you think your pay grade may be every year to your projected separation year.

If you’re not sure, the system automatically fills in each year’s possible pay grade following a “typical military career progression.” You can continue from this step or override the calculator’s suggestions with the drop-down menu.

The High-3 calculator shows your estimated retirement benefits in three different tabs.

  • The first “Overview” tab shows how much you can expect to receive every year through your basic pay, your High-3 pension and any TSP withdrawals combined.
  • The “TSP Summary” tab will show the total future amount of your TSP account both as it grows through investments and shrinks as you withdraw.
  • The last “All Payments” tab reviews every year of your projected service and retirement payments as a table instead of a graph. This includes your pay grades, any TSP contributions and your retirement payments – both your pension and any TSP payments.

You can change the results of this calculator by adjusting your retirement year, possible pay grades and additional contributions to your TSP account.

For example, you may have originally put in your current pay grade. However, pretend that you’ll get a promotion soon – with a higher basic pay — and stay in for another three years at that pay grade. This switch can increase your estimated retirement pay.

If you are a member of the Guard or reserve, your retirement is calculated differently than the active component. You can also calculate your non-regular retirement if you joined before 2018 using the REDUX Calculator.

How to use the Final Pay military retirement calculator

Service members who entered the armed forces before Sept. 8, 1980, and are still serving can use the Final Pay Calculator to estimate their future military pension amount. Service members who joined the service after Sept. 8, 1980 use the High-3 calculator.

Of all the retirement plans, the Final Pay system uses the simplest formula. You’ll receive 2.5% of your final monthly basic pay for every year of service. For example, if you retire after 40 years of active service, then you can expect to receive 100% of your monthly base pay as your retirement pension.

For the Final Pay calculator, you’ll enter all the same information that the other service members did for the High-3 calculator.

You can also reset the calculator’s results by adjusting the factors. For example, delaying your retirement year may result in a higher base pay due to automatic cost-of-living adjustments, even if you don’t get a promotion. This would increase your retirement pay.

If you joined after 2018, use the Blended Retirement System calculators for active duty or those in the National Guard or reserves.

Did you know that Military OneSource offers free financial counseling for all active-duty service members and their immediate families over the phone, by chat or secure video conference? They can review your High-3 or Final Pay calculator estimates and offer suggestions on making the most of your future retirement pensions. You can also go to your on-base finance office for free in-person help figuring out your retirement plans and payments.

Remember, the sooner you start planning for your transition to retirement, the more money you’ll have to spend when you get there.

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