Is an Early Military Retirement a Good Option? A Look at TERA

The Temporary Early Retirement Authority (TERA) allows military members with 15-19 years of active duty service to retire earlier than the usual 20-year requirement. This program, introduced post-Cold War, was reauthorized in 2011 and extended through 2025.
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From time to time, the military offers servicemembers an option for early retirement through the Temporary Early Retirement Authority, or TERA. This program allows members to retire with a minimum of 15 years of active duty service instead of the traditional 20 years of service. This program is only available on a limited basis and must be approved by the Secretary of each branch of service.

A Brief History of Early Military Retirement Programs

The military last went through a major drawdown in the 1990’s, following the Cold War and the first Gulf War. During that time, the military contracted in many ways, including the retirement of weapons systems, base closures, and the mass attrition of personnel through Force Shaping and involuntary separations and ETS separations. One of the other tools the military used was early retirement under the TERA program, which was authorized during the end of the Cold War era, during the 1993-2001 fiscal years.

Following a decade of relative peace, the world was rocked by the terror attacks of September 11th, which brought us into the War on Terror. Instead of decreasing in size, our military increased its numbers and even implemented measures to temporarily prevent some members from leaving the service. Many military members were unable to leave the service when they originally intended to, as several branches enacted stop-loss measures that kept servicemembers in uniform long past their initial separation date.

However, as the war slowed, the need to keep as many servicemembers in uniform decreased. In recent years, each military branch has used different methods to reduce their force size, including offering servicemembers separation pay, the opportunity to get an early transition from active duty to the Guard or Reserves, a transition to another branch of the military, or even get an early out through Force Shaping or other measures.

The National Defense Authorization Act signed in 2011 reauthorized the military branches to offer the Temporary Early Retirement Authority program, beginning in 2011 and lasting through 2018. The law was recently extended through 2025.

The time in service requirement, which is more than 15 years and less than 20 years, is set by law. The other criteria are set by each branch so they can determine how best to shape the quality of their force. Generally, this program is only available to servicemembers who are in overmanned career fields. You will need to check with your respective service to determine if you are eligible for early retirement under TERA.

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TERA Eligibility & How it Works

TERA allows servicemembers who meet certain criteria the opportunity to retire with only 15-19 years of service, a substantial reduction from the normal requirement of 20 years of good service.

However, this comes at a price, as your retirement pay will be lower under TERA than it would be under a traditional retirement. The calculations, which are set by law, require the early retiree to accept a reduction multiplier of 1% per year under 20 years served. We will provide some examples below.

TERA eligibility is authorized by law through FY 2025, however, it is not available to all servicemembers with 15-19 years of service. It is only available when authorized by the Secretary of your respective branch of service. This is usually used as a tool to help address situations in which certain career fields are overmanned and there is no easy way to reduce those numbers.

Calculating Early Military Retirement Pay

Military members who retire early will have their retirement pay reduced by a reduction multiplier. We’ll show you how to calculate retirement benefits under both the High-3 system or the Career Status Bonus (REDUX) retirement systems. Most servicemembers under the BRS shouldn’t be eligible for TERA quite yet, but the process would be the same, simply calculate your retirement pay as you normally would, then reduce it by the reduction multiplier or 1% per year under 20 years of service.

How to Calculate High-3 Retirement:

This retirement plan gives the servicemember a pension based on their average basic pay for their highest 36 months of service. Under this plan, each year served is worth 2.5% toward an annual pension. For example, serving 20 years would result in a pension worth 50% of their average base pay. Each additional year served increases their base multiplier by 2.5%. So 30 years of service would be worth a 75% pension. Under this plan, the annual Cost of Living Adjustment (COLA), is based on the Consumer Price Index (CPI).

How to Calculate REDUX Retirement:

In 1986, the military began offering servicemembers their choice of the High-3 retirement system or the Career Status Bonus/REDUX retirement. With the CSB/REDUX plan, servicemember would receive a $30,000 cash bonus at their 15-year mark in return for accepting a reduced retirement multiplier and COLA rating.

REDUX is calculated in a similar fashion as the High-3 retirement plan, with a few notable differences. Instead of using a 2.5% multiplier across the board, the REDUX plan uses a 2.0% multiplier for the first 20 years, then 3.5% for each additional year of service. In this example, a 20-year retirement would be worth 40% of base pay, while a 30-year retirement would equal 75%, the same multiplier as the High-3 system. However, there is one more catch: under the REDUX plan, the annual Cost of Living Adjustment (COLA), is based on the Consumer Price Index (CPI) minus 1%. Since the annual Cost of Living Adjustment is less, the pension grows more slowly over time. Read more in this article about deciding if REDUX is worth it.

How to Calculate TERA Retirement:

The Temporary Early Retirement Authority retirement plan is based on the above retirement plans, but it is reduced by a Reduction Factor equaling -1% for each year under 20 years served. For example, 19 years served would be 99%, 18 years would be 98%, 17 years would be 97%, etc.*

Start with whichever retirement system you chose, the High-3 or REDUX, then apply the following formula:

Active duty pay x Percent Multiple x Reduction Factor (-1% for each year short of 20 years) = TERA Retired Pay

In this formula, your Active Duty Pay is the average of your highest 36 months of pay, the percent multiple is the multiple based on your retirement plan and the number of years served, and the Reduction Factor is a percentage that further reduces your retirement because you didn’t serve the full 20 years. Here are two examples for someone who served 15 years:

  • High-3 Plan at 15 years: Average pay x (15 years x 2.5% * 95%) = 35.625%
  • REDUX Plan at 15 years: Average pay x (15 years x 2.0% * 95%) = 28.5%

As you can see, taking the TERA early retirement option results in a much smaller retirement benefit, especially under the CSB/REDUX option.

*Calculating more than 15 years of service, but less than 20 years: It gets a little more complicated if you want to calculate your retirement benefits if you served over 15, but less than 20 years. The military gives credit for months served, so your base multiplier wouldn’t necessarily be a round number, such as the 95% we used above. Here is an article which also discusses the value of an early military retirement.

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Other Retirement Benefits Under TERA

To be clear, this is a full military retirement, complete with Tricare Prime and Tricare for Life, starting immediately, the same retirement pay COLA adjustments, base access, and access to the same benefits available to other military retirees, such as access to the Commissary, Base Exchange, MWR facilities, and more.

There is no special decal on your military ID card, and no one will have to know if you don’t tell them. The biggest considerations include your final pension and your quality of life.

Is Early Military Retirement a Good Decision?

Now all you need to do is run the numbers and look at your future income potential and take into consideration quality of life issues. To be clear, there isn’t always an easy answer. If you are financially secure and are ready to move on to the next stage of your life, then early retirement may be well worth it from a quality of life standpoint, even with the reduced pension. This may also be the case if you believe you have a high-income potential after your military service. Many civilian jobs pay much better than a comparable military job, and the difference in the pension can be easily made up with the higher civilian salary.

On the other hand, if you aren’t financially secure right now and your income potential isn’t as high, then you may consider avoiding the early retirement option. This isn’t a decision to take lightly. Take your time, run the numbers, consider your quality of life if you stay or get out, do some soul searching, and speak with your spouse or significant other. This is a major decision and one you should spend some time on.

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  1. Richard says

    Where can we find out career fields / branches that might still be authorizing early retirement? I’m in an overmanned career field and been passed over for promotions. Hit 15 years next year so thinking time to pull the cord and get out with something as can’t hit 20.

    • Ryan Guina says

      Richard, you would need to speak with your branch of service’s Human Resources or Personnel department for more information about TERA. I’m not aware if it is currently being authorized by any branch of service. But these things change with the needs of the military. We maintain this article because these programs can be selectively enabled at a moment’s notice, and because they apply to many previous retirees. I wish you the best!

  2. John Rabbers says

    Do I lose my military pay when I turn 64? I retired at 16 years, 2 months, and 8 days! Do I lose all military benefits before I die or do I receive them till I die? I was in the USAF and retired as an E5! Thank you

    • Ryan Guina says

      John, if you retired from active duty under TERA, then you should continue receiving military retirement benefits for the rest of your life. You can contact the Air Force Personnel office for more specific information. Best wishes!

  3. Keaton says

    I’m currently at 17YRS and I’m looking into TERA right now. From several of the pay charts I have seen one stood out to me that had # of pmyts. My question is if I retire early under TERA will I receive a retirement pay check for the rest of my life or do I just receive payments till a certain amount has been paid out over time?

  4. Robert Gulley says

    So I took the TERA at 15 years and it was a cluster! no one knew what I feel under or what was happening. I have since done 5 years in the guard to fulfill my other time. I have recieived a 90% disability rating but to get that they are taking my severence/retirement package away and then once that is payed I will receive disability. I was told at the end of the process that I don’t qualify for tricare prime or for life because I wasn’t retired. But my orders state that I am. So I ask what I need to do to clear this up. Id like to end my service now with the guard since I have now have my 20 year letter.

    • Ryan Guina says

      Hello Robert,

      I recommend working with your Human resources or Personnel office for help. Your situation isn’t very common so you may have to elevate your situation to a higher level command if you cannot get assistance at the local level.

      Best wishes!

  5. Donald J. Statz says

    HI Ryan,

    Under the TERA program did you ever hear if a service member retired Under the TERA after leaving service and worked as a public servant for 5 years, they could submit to the Pentagon TERA department and recieve there 5% percent they lost Under the TERA program get it back when they retired. I enlisted in and retired under the TERA program,, June 1980 retiring July 1995 from the USAF as a Security Police. Thanks for your help, Dj

    • Ryan Guina says

      Hello DJ,

      I am not familiar with this. I recommend contacting your Human Resources Command or Personnel office for more specific information.

      Best wishes.

  6. Robert Yaap says


    This person needs some answers on what a veteran can do if he took early retirement and is also trying to collect benefits for a serious medical condition. Please advise him on what is available to veterans if they want to apply for both.

    • Ryan Guina says

      Hello Robert,

      This is a situation in which it is best to work directly with a Veterans Service Officer for one on one assistance. There are many Veterans Service Organizations that offer free benefits claims assistance, including organizations such as the DAV, AMVETS, American Legion, VFW, and more. The veteran can also check with his or her county office of Veterans Affairs for assistance.

      Best wishes.

  7. Steven McKean says


    Brilliant article! I retired from the Air Force after 15 years with reduced retirement pay. However, there are two issues that I wish you had mentioned. First, a person’s service will tempt the person to accept a cash buyout. I was offered $35,000 to separate, but I turned it down to take the retirement. My cousin took a buyout and was broke within nine months. Since retiring, I’ve earned $300,000 in retirement pay, plus saved over $100K in retiree discounts for medical, meals, travel, cell service, etc… Second, an early retirement puts a person into a gray area. A phrase that I encounter often is “Retired with 20 or more year.” Organizations will use that phrase inclusively or exclusively. There is no option to select Retired with less than 20yr…

    • Ryan Guina says

      Thanks for sharing, Steven.

      The buyout option is rarely a good deal for veterans. As you said, once the money is spent, it’s gone. But the retirement benefits are for life!

      In the case of “retired with 20 or more years,” I believe most organizations are referring to military retirees in general, as opposed to veterans who served, but did not retire. I’ve not really seen any organizations exclude early military retirees or those who retired with a medical retirement. 

      Thanks again!

  8. Heather says

    Hi Ryan,
    My husband did not make 04 seven years ago and was kicked out of the military with 17 years four months in the Navy. We were so close to retirement. He’s in the reserves as we speak it there a way to get an early retirement with his position? 17 years and 4 months active duty?


    • Ryan Guina says

      Hello Heather,

      No, there is not a way that I am aware of to get early retirement under these conditions. The TERA program is the primary means of early retirement and that can only be chosen when it is offered by the branch of service. If your husband transitioned directly into the Reserves, then it is likely that he already has 20 good years of military service which would make him eligible for a Reserve retirement. If that is the case, he can retire, but he would not be eligible to receive retirement pay or health care until age 60. He could also try to find an Active Guard Reserve (AGR) position, which is the Reserve equivalent of active duty service. If he serves as an AGR, he would be able to retire with an active duty retirement after he has 20 years of active duty service. His 17 years and 4 months would count toward that 20-year requirement, along with any additional active service time he has from his time in the Reserves (activations, deployments, certain training, etc.). I encourage him to speak with his personnel or retention office to see what career opportunities are available.

      I wish you and your family the best!

  9. Mark Strombeck says

    Hi Ryan,
    I am a medically retired USAF Pararescueman with 19 years, 2 months served prior to being retired. I get retirement benefits but no retirement pay, just my VA disability pay. That has been the case for the last 22 years and I feel that I should (and know many people that are) get my military retirement as well. If you somewhat agree, what would be the best and first steps for me to take?

    Thank you, Mark Strombeck

    • Ryan Guina says

      Hello Mark, this situation is based on how the laws are written. The only way to change this is to have the laws overturned or amended. This isn’t something I have personal experience with. However, there are many military lobbying groups and organizations that work to get laws passed through Congress. I would contact one of those organizations to see if they have this on their agenda, or if this is something they think has a chance of being overturned. This article explains more about the process and who you may be able to contact – how to be your own advocate for military and veterans benefits. I hope this points you in the right direction. I wish you the best, and thank you for your service.

  10. Melvin Taylor says

    Lots of good information here I took TERA in January 1996 after 16 years cold war down sized Sub service I can say I’ve already collected over 250,000 in benefits it was the best decision I ever made I was only 33 years old.

  11. Larry Hudson says

    I retired in 1995 in the TERA program during the drawdown of the 90s. My DD-214 says I may be eligible for a retirement pay recomputation at age 62. How does that work?

    • Ryan Guina says

      Hello Larry,
      I believe it would be the same as the REDUX calculation:

      “REDUX Adjustment at Age 62. To counter the pay gap between the two retirement systems, retirees under REDUX receive an adjustment at age 62 to bring their retirement pay up to the level it would have been under the High-3 retirement system.”

      Basically, DFAS calculates what your retirement COLA would have been under the High-36 retirement plan, and increases your retirement pay to that point. You can contact DFAS to verify.

      Best wishes.

  12. Mike Moreau says

    I have a question. In 1992, I was discharged from the Army with an honorable discharge. At the time of the downsize, I received a selected separation bonus. I served a total of 16 years active duty. My question is: Can I or am I eligible for a partial retirement under TERA? Thanks

    • Ryan Guina says

      Hello Mike, No, separation pay is given to members who are separated from the military after a certain amount of time. Separation pay is offered to servicemembers because they are not able to continue their career and earn a full retirement. TERA is only offered on a limited, case by case, basis. If you would have been eligible for TERA, you would have been offered it prior to your separation date. 

    • Ryan Guina says

      Hello Jesse, Yes, but only when the program is being offered. TERA is only offered at certain times, and only at the needs of the military. it is usually only offered to members with a certain amount of service time, and sometimes only in certain career fields, when the military is trying to help shape their manning situation.

      Also, the retirement calculations may differ, as you would use a 2.0% multiplier instead of the 2.5% multiplier.

      I hope this helps. I wish you the best, and thank you for your service!

    • Ryan Guina says

      Hello Lauren, TERA is currently only available for the Marines, and only in limited circumstances. Each branch fo the military can elect to bring it back, but it is up to their discretion.

      I wish you the best, and thank you for your service!

    • Ryan Guina says

      Hello Lauren, so far as I am aware, only the Marine Corps is currently offering TERA, and only under limited circumstances. However, each branch can bring it back at their discretion.

  13. Toni says

    I have almost 30 years in the Guard, but I became an AGR after being in for a while, and now have almost 17 years in active/AGR. Would I be eligible for the early retirement? I will only have 17 Active, but a total of 30 in the military.

    • Ryan Guina says

      Hello Toni, You would be eligible to retire today if you want a Guard retirement. However, you would not be eligible for an active duty retirement until you have 20 years of active duty service.

      The military sometimes offers retirement under TERA, but so far as I am aware, the only branch currently offering it is the Marines. You can speak with your personnel or human resources office for more information about your current options.

      I wish you the best, and thank you for your service!

  14. Cliff Collins says

    I did 15 years 19 days total military time as army got involuntary separation pay had to do 3 years national guard to receive full pay could I have gotten early retirement for that time I also got disability in which they recouped the involuntary sep pay before I could receive any disability pay

  15. Bruce says

    I was retired in 2010 pendinging med board which was a sure thing as to injuries sustained in combat the va at same time was processing me for disability which they put at 100% as did s.s. I was not offered or was it mentioned that I could be receiving both. Is there any way to find out now? Thank you and how will I know if I get a reply to this?

  16. Steve Achuff says

    I was active duty from 1973 to 1976 then reserves totaling almost 15 years before I was rifted in 1996. Am I eligible for any military retirement benefit? I would’ve stayed but Bill Clinton was busy downsizing the forces.

  17. Wayne says


    I retired under TERA in 1996 with 18yrs 9mons . I must of missed it in your articles…what are the benefit changes at age 60 and how do I apply?

    • Ryan Guina says

      Hello Wayne, Thank you for your question I’m not aware of any benefits changes at age 60 unless you also signed up for the REDUX retirement, which has a COLA adjustment at age 62. I am not aware of any other retirement benefits changes for early retirement.

      It’s possible they exist – the military pay systems is complicated, and many people are grandfathered into programs that no longer exist. I recommend contacting DFAS or your branch of service personnel center to see if there are any pending changes to your retirement benefits.

      I wish you the best, and thank you for your service!

  18. James Reynolds says

    I have a question for you. I know this is a bit off this subject but, I got out of the service in 1993 at the rank of E-7. I got out on the Special Separation Benefit. Which was a lump sum payment. I had 16 years of service at the time. Can you tell me or point me in the right direction. I would like to know what benefits I am entitled to at age 60. Thanks in advance

    • Ryan Guina says

      Hello James, Thank you for contacting me. The best thing to do is contact a veterans service organization, such as the DAV, VFW, AMVETS, etc., or the VA. All of them have counselors that can help you understand which benefits you may be eligible to receive. (These often vary based on when you served, if you were in any conflicts, how long you served, and many other factors). That is why an individual review is recommended.

  19. Richard says

    so, if I’m understanding “correctly”, they, as in MPF (Military Personnel Section) have to offer you the TERA option; you can’t apply for it on your own. I’separate right at 15 yrs, soon AF. Can/Would I qualify?

    • Ryan Guina says

      Hello Richard, Thank you for contacting me. Yes, from what I understand, TERA has to be offered. However, you should inquire about it to see if it has been offered for servicemembers in your particular situation (career field and years of service). If it has not been offered, you would most likely receive Involuntary Separation Pay.

      If you wish to continue your service, then it may be a good idea to look into joining the Guard or Reserves, where you may be able to continue working toward a military retirement. It’s important to note that you would have to repay any separation pay you receive if you later retire from the military (the reasoning behind this rule is discussed in the article linked above).

      I hope this points you in the right direction. I wish you the best, and thank you for your service!

      • Benjamin says

        Good evening. I came across several of your articles. I have a few questions. Quick run down first. I am a MSG in the US ARMY. Unfortunately I have been forced to medically retire Do to major vision loss. I am currently on transitional leave. I have a little over 15 Years of active duty service. Since 2013 I have had three brain tumors. Surgery number 1 in March of 2013. Tumor returned, surgery again in 2015. During the procedure I lost vision in both eyes; from the 12’oclock position to the 6 o’clock position (permanent) Tumor number 3 is inoperable. I have had one round of radiation and we are hoping that worked. My drivers license has been medically revoked; because of the significant vision loss. I recently just completed the grueling task of a medical board. Of course I was found unfit. After fighting with the VA, I was awarded 100%. I am currently on my terminal leave. My last day on active duty is 28June2017. I entered service in Jan 2002. So including my terminal/transitional leave that puts me at 15yrs 5 moths and 20+days.

        So here are my questions.

        1. If I receive 100% VA disability (which I have) can I also collect a 15 year retirement! If so how do I go about doing so.

        2. If your answer is no. Is there any other form of retirement on the Military side that I am entitled or eligible for.

        3. This is something that was never offered to me while going through the medical board process.


      • Ryan Guina says

        Hello Benjamin, I’m sorry to hear about your health conditions and I hope the tumors will be operable or can be mitigated by the radiation.

        Medical Retirements are different than a regular active duty retirement. They will typically pay out the higher of your medical retirement amount or the VA disability compensation amount.

        This calculator from the DFAS website can be helpful in calculating your retirement benefit.

        All this said, medical retirements and disability compensation are complicated topics, and I highly recommend working with a VA benefits counselor. There are many veterans service organizations that offer free benefits claims assistance, and I strongly reocmmend using one of them. Some organizations include the DAV, AMVETS, VFW, American Legion, and others.

        Again, I wish you the best of health, and thank you for your service.

  20. Charles A. Martin says

    Is there any way you could provide a direct # to someone who could answer a simple question. I left the Army aug 1994 after 17+ years of service. Can I apply for early retirement, if so, what are the requirements?. Thank you so very much

    • Ryan Guina says

      Hello Charles, I don’t have a direct telephone number for anyone. Based on what you’ve written, you won’t qualify for early retirement benefits unless you were officially offered early retirement at the time you left the military. You need 20 full years of active duty service to qualify for an active duty retirement, unless you are medically retired, or are offered early retirement under the TERA program. You would already be retired and receiving military retirement benefits if you had been medically retired, or you had retired under TERA. Qualifying for a retirement under the Guard or Reserves requires 20 good years of service. Again, it sounds like you are just short of that number.

      The only thing I can recommend doing is reviewing your records to see where you ended up with your service. You could get copies of all your service records from the National Archives. Then you should visit a VA benefits counselor to see which benefits you may be eligible to receive. A benefits counselor will also be able to help you review your service dates to see if anything was missed at the time you left the Army. They can help you apply for any benefits which you may be eligible to receive. I hope this points you in the right direction.

  21. Noriko Watanabe says

    I have a good friend who is curretly working in Iraq as a US soldier.
    He submitted his early retirement letter to UN office in Iraq early this Janyary because of his only son who has no family to look after him.
    They sent the letter to the States, but it has not been granted yet.
    They said that it’d take 7 months to look on it.
    The son at the age of 12 has been living in the school dormitory waiting for his dad’s retirement.
    It’s already at the end of July, and he’s been waiting for almost 7 months.
    Lately he received the letter to notify him the upcoming another mission.
    I wonder how we can find out how far the retirement application process is going and how he can avoid this mission.
    Please help me and give me some advice as soon as possible.
    Where should I contact for this issuelol


  22. Jackie Brady says

    To be clear, early retirement is NOT the same as a full 20 year retirement for a former spouse. Unless the soldier has served 20 full years, there is no protection, no TRICARE benefits for the former spouse. Even with the Uniform Former Spouse Protection Act. My husband served 17 years six months. He took advantage of the early retirement. We’ve been married almost 48 years, clearly overlapping his military service. Because he didn’t serve the full 20 years…I get no benefits because I just divorced him now.

  23. T Mcguinness says

    I took The TERA retirement in mid 90’s they told me if I worked a Public service job my time would be recalculated is this correct?thanks

    • Ryan Guina says

      T Mcguinness, This is a topic I’m not very familiar with. Here are a couple references that should help out: (1) Military Service Buyback Estimator (2) Military Credit & Buyback Options.

      I also recommend setting up a meeting with your HR department and requesting an official statement of your benefits and an official estimate of what it would cost to buy out your military time. This should help you better understand your benefits and whether or not buying back your military time would be a good option. I hope this points you in the right direction. Best of luck, and thanks for your service!

  24. The_Black_Knight says

    Some things to keep in mind for service members who may be offered TERA as an option as the military continues to decrease its numbers until 2018.
    I was an senior officer in the US Army who was non-promotable but retained for service into Title 10 requirements for sanctuary.

    TERA is NOT “automatic,” and will be determined by your service and service BRANCH. If you have “mistakes” in your OMPF, Human Resources are STILL “headhunting”, and will attempt to remove you via other means first, before you are qualified.

    I was offered TERA, and determined this was my best option at 19 years, at a time when the US Army was repeating history from the period of the First Gulf War.
    I saw no reason to continue, because I had already reached my goals and could not progress as a old “Mustang.”

    The benefits are MUCH greater than TERA itself, ID card, Tricare, or other benefits.


    Why is this important? VA Disability Compensation.

    If you receive a disability rating ABOVE 50% you WILL receive FULL COMPENSATION on top of retire pay via Current Retirement Disability Pay (CRDP). Less than 50% you will be provided the offset, unless you qualify for Combat Related Special Compensation (CRSC).

    Learn your benefits BEFORE YOU RETIRE. It may mean the difference of HUNDREDS of THOUSANDS of DOLLARS.

  25. Joshua says

    If you had elected the CSB will that have to be paid back if you are going to do the 15 yrs instead. The reason I ask is I signed up for the $30,000 15 yr bonus to stay in until 20yrs. However I am considering TERA. What will happen in that case and what would the monthly pay for a 15 yr E6 be if the last 3 yrs were at E6 pay?

  26. Adam says

    With MAJ selection rates plummeting, I am fearful I will be passed up for promotion a second time next March (2015). I will have 17 years in in June of 2015. As I understand TERA, this means I will get about 45% of my regular retirement if I then use TERA. But I notice that TERA says it is not automatic…Is this something anyone gets turned down for IF they are already facing involuntary seperation for being passed over twice?

    • The_Black_Knight says

      This is determined by your service and service branch. It most definitely is NOT AUTOMATIC, as this occurs every year after the the promotion boards, but requires an additional step. This the called for officers, the “Officer Retention Boards,” and is completely different than the QMP boards that are conducted with NCOs, because you are an officer designated by Congress under Title 10 conditions.

      If you are not “continued for service” under a retention board, your branch of service may offer you the option of TERA, IF the number of officers required for reduction and authorized by Congress in THAT FISCAL YEAR, has not already been exceeded and IF you do NOT PASS 18 years before the cutoff into sanctuary for 20 year retirement.
      If all things fail, you will receive a LARGE severance check and a honorable discharge.

    • Ryan Guina says

      In a way, it’s both. Your retirement pay is based on 2.5% per year served, with 20 years being the normal requirement (20 years * 2.5% = 50%). So each year under 20 is a reduction of 2.5%. But there is also a reduction factor added on to the calculation. This is the cost of getting out early. For each year you served, you get a credit of 2.5% of your base pay. But you have to multiply that by the reduction factor, which is -1% for every year under 20 you served.

      So if you served 15 years, you would multiply your base pay like this: 15 years * 2.5% = 37.5%. Then you add the reduction factor, which is 100-5, 95% (the 5 comes from subtracting 15 years out of a possible 20). The final number you come up with is 35.625%.

      Keep in mind this is a rough calculation. It’s a good idea to visit your personnel or finance office for an accurate calculation based on your specific situation.

      • Rob Dickinson says

        Hi Ryan, I have a question:
        I was one of the dumb guys that got the Redux plan while I was in the navy. (My 15 year mark was 2007). I retired in 2012 at the age of 41, dealing with the 40% retirement. But recently I heard that at the age of 63, the military pension goes back up to the 50% retirement. Is this true, or just scuttlebutt?

        Thanks for your time…

      • Ryan Guina says

        Hello Rob, It’s a little different than that.

        The REDUX retirement system has a 2.0% multiplier instead of 2.5%, which results in a lower retirement check. It also grows more slowly because it uses a lower Cost of Living Adjustment. The High 3 retirement plan uses the Consumer Price Index each year, while REDUX uses a calculation of CPI – 1%.

        So if the CPI is 3.1%, military retirees under High 3 would receive a 3.1% pay raise, while REDUX retirees would receive a 2.1% pay raise.

        There is a one-time adjustment at age 62 to bring the REDUX retiree’s pay up to what it would have been under High 3 (for COLA raises). However, the COLA remains at CPI – 1%, so the gap begins increasing again.

        This article covers the REDUX retirement plan in more detail.

        I hope this is helpful.

  27. lorne says

    Your TERA numbers are wrong. ALARACT 284/2012
    You loose 2.5% per year under 20, not 1%. Also, there is a reduction factor to lower even that by a partial percentage on top of the 2.5% less you already loose.
    Monthly $ x (months served / 12)x.025)x reduction factor listed in ALARACT.
    With no reduction factor=$3065

    • Ryan Guina says

      lorne, we have the same numbers, using the High-3 retirement system. I have the following formula listed in the article (as taken from a DFAS site):

      Active duty pay x Percent Multiple x Reduction Factor (-1% for each year short of 20 years) = TERA Retired Pay

      In your case, we have the following numbers: Active Duty Pay = $7,000, Percent Multiple = (210 months / 12 months = .4375), and Reduction Factor can be (found here, which comes out to .9750 for 210 months of service.

      So we have $7,000 * .4375 * .9750 = $2,985.9375.

      DFAS rounds down for retirement pay, so the final number would be $2,985 per month.

      These calculations can be tricky, and the terminology may differ from branch to branch. It’s important to always double check your numbers and visit your personnel office or finance office for further information.

  28. The Military Guide says

    Great post, Ryan, and I appreciate the link!

    I volunteered for TERA three different times during the 1990s and was turned down every time. Back then I thought I’d have to get a civilian job, but in retrospect the money would have been enough to make it even without a bridge career. You’re right: the real assets are the retiree TRICARE and the other military benefits. Quality of life is just bonus.

    J Marie, I’ve never heard of TERA for those who have already separated. The enabling legislation (and each service’s program) has only applied to those who currently count against end strength. I wish it was retroactive, but I doubt that will ever happen.

    J Cap, you may have earned enough “good years” in the inactive Reserve to qualify for a Reserve retirement. Whether that’s 15 or 20, there’s only one way to verify it: fill out the paperwork and send it in. The process will give you a definite answer.

    For everyone currently on active duty or in the Reserves/Guard, I’d recommend keeping an eye on your service’s personnel websites and other service-wide announcements. The TERA program is authorized by Congress and all of the military branches have said that they’ll use it in the coming years, but they’ll offer it mainly to over-staffed specialties as a “force-shaping tool”.

    As Ryan says, the key is to prepare by thinking through the “What if?” questions now and discussing it with your spouse/family. Maybe you’d even want to find an old TERA announcement and draft your response. Don’t wait for the offer to pop up: start thinking about it now. Then when the message comes out you’ll be able to respond within 24 hours.

    When the news comes out you’ll read about it here or on my blog or on, too…

    • Ryan Guina says

      Thanks for the comments, Doug. I like how you have covered this topic on other sites. There is much more to the decision than I gave. I focused on the numbers, but the real decision extends much further than the raw numbers. It’s important to make sure you are ready to leave the military way of life and that you have your plan for what you will do after you retire.

  29. J Cap says

    I have the same question as J Marie. I had 10:5+ AGR service and 4.5+ Reserve time. I have been in the inactive reserve since 1993. I will be turning 60 soon and they sent me retirement paperwork from St. Louis. Is this why?? Can I apply for retirement with less than 20 years??
    Thank you very much.

  30. J Marie says

    Hello Ryan,

    Who is eligible for this type of retirement? Is this for recent soldiers from 2011 to present? Are these options available to soldiers who ended their careers at 15 years back in the 1990’s? You always provide such great information, no one is even “talking” about this yet! Thanks

    • Ryan Guina says

      J Marie, As Doug from The Military Guide mentioned in his comment, this program is only open to current military members. I am not aware of any programs that would retroactively apply to those who have already separated from the service.

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