Continuation pay under the U.S. military’s Blended Retirement System (BRS) is effectively a cash bonus that mid-career servicemembers can opt into between their 8 and 12th years of service in exchange for serving a minimum of four additional years.
Members who opt into the bonus can choose to receive a lump sum payment or annual installments during reenlistment. However, the amount of money that members can earn varies depending on their branch of service, their individual specialty skills and external factors such as retention rates across the military services.
This article provides an overview of the continuation pay benefit under the BRS, including rates, eligibility, and suggestions on how to use your bonus to meet your short and long-term financial goals.
What is continuation pay?
Continuation pay is one of the main pillars of the U.S. military’s BRS, which went into effect Jan. 1, 2018, and remains the default retirement plan for all servicemembers who enrolled past that date.
Essentially, continuation pay is a one-time direct cash payout that is given to mid-career servicemembers as a retention incentive.
In exchange for the bonus, servicemembers must commit to serving an additional three or four years. Keep in mind that continuation pay can be received in addition to other benefits, such as retention bonuses or other career field-specific incentives.
The amount of continuation pay you can qualify for varies by military service, active duty or Reserve status, and year. In general, continuation pay rates lie within the following ranges:
| Military Continuation Pay Multipliers | |
| Active-duty and Active Guard/Reserve | 2.5 to 13 times your regular monthly basic pay |
| Reserve Component | 0.5 to 6 times your regular monthly basic pay |
The payout rates are established by each service on an annual basis and take into account overall military retention goals.
2024 Continuation Pay Rates
The payout rates are established by each service on an annual basis and take into account overall military retention goals. When branch retention rates dip, the continuation pay rates tend to climb.
The BRS continuation pay rates for 2024 are nearly identical across each of the branches.
The timing, too, of continuation pay is fairly standard across the services and occurs at the 12-year mark for most. Two exceptions include the Army’s Reserve Component, which is at the 8 to 12-year mark, and the U.S. Public Health Service, which is at the 10-year mark.
Across all services, the additional service obligation is four years.
| 2024 Continuation Pay Rates Per Branch | |||
| Service | Pay Rate Multiplier | Opt-In Eligibility | Re-enlistment Obligation |
| Army | 2.5x AC 4.0x RC | 8 to 12 years of service | 4 years |
| Marine Corps | 5.0x AC 1.0x RC | 12 Years | 4 years |
| Navy | 2.5x AC 0.5x RC | 12 Years | 4 years |
| Air Force | 2.5x AC 0.5x RC | 12 Years | 4 years |
| Coast Guard | 2.5x AC 0.5x RC | 12 Years of service | 4 years |
| NOAA | 2.5x AC | 12 Years of service | 4 years |
| USPHS | 2.5x AC | 10 Years of service | 4 years |
For more detailed rules and guidelines per component:
- Army servicemembers can reference here
- Marine Corps servicemembers can reference here
- Navy servicemembers can reference here
How is continuation pay calculated?
The amount of continuation pay to be received is based on several factors, including a servicemember’s base monthly pay rate and a pay rate “multiplier” as outlined above. This multiplier is based on service-specific retention needs as well as the need for specialty skills and hard-to-fill positions, so it changes year-over-year as the personnel needs of the services fluctuate.
To find an estimate of the total payout of your continuation pay, you can use the following calculation:
- Monthly Base Pay Amount x Continuation Pay Multiplier = Gross Continuation Pay
- Gross Continuation Pay – Federal and State Taxes = Net Continuation Pay
Continuation Pay Eligibility Requirements
Not every servicemember is eligible to receive this continuation pay. In order to qualify for the continuation pay bonus, the servicemember must be enrolled in the Blended Retirement System and have completed between eight and twelve years of service.
In this case, the “years of service” is calculated from the member’s Pay Entry Base Date, which appears in Block 4 of the Leave and Earnings Statement.
How to Apply for Continuation Pay
Once a servicemember has met the eligibility requirements for BRS continuation pay, they may complete the Request for Continuation Pay (CP Contract). This must be completed no later than 30 days prior to hitting the 12-year mark. Here is an example of the form, but check with your branch of service for the most current version.
Servicemembers have the option of receiving the payout in a single lump sum or in a series of equal installments that are allocated over a period of time, but not for longer than four years. This is an important decision to make because continuation pay is treated as earned income and is, therefore, taxable. Spreading out payments across a number of years could be a good idea for those seeking to pay less in taxes overall.
Forward-thinking servicemembers can also have their continuation pay directly transferred to their Thrift Savings Plan (TSP) account, which is a smart way to manage a cash windfall.
Can I contribute continuation pay to my TSP?
Yes, you can. Similar to all specialty compensation, pay and bonuses, continuation pay can be invested in your TSP up to the annual TSP contribution limit. However, it’s good to be aware that this will count toward your annual contribution limit. If you max out your limit early, you may miss out on government automatic and matching contributions.
What should I do with my continuation pay?
Receiving a lump sum of cash can bring spending temptations out of the woodwork. Spending all or part of your continuation pay windfall may help bolster your financial future by paying down debt or using it as a down payment for a house. However, it’s wise to consider how saving and investing this bucket of cash could help you and your family down the road.
Here are just a few ideas on how you can maximize your BRS continuation pay:
- Max Out Your TSP Account: As of 2024, the annual TSP contribution limit is $23,000. Consider contributing all or some of your payout to your TSP account so that your money is working for you over time.
- Establish an Emergency Savings Account: Having cash on hand is crucial in an emergency, which is why it is recommended to have enough funds to cover 3-6 months of expenses in an easily accessible savings account.
- Pay Down Debt: Aggressively paying down credit cards, student loans, or other debts will not only help you sleep better at night, but it will also help you pay less in interest over time and could positively impact your credit.
You use any of these bonus management strategies, or you can spend your money freely. Either way, it’s a good idea to manage your money with a plan.
For more guidance on how to manage your continuation pay bonus, it’s best to seek out a financial advisor.
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