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Military Retirement Saving and Investing Options

Military members have a variety of retirement savings and investing options. In addition to the military retirement pay you earn for serving 20 years or more in uniform on active duty or the equivalent in service for the Guard and Reserve, there are several ways to set aside money to use after age 65.

  • Military retirement benefits
  • Thrift savings plan (TSP)
  • Other investment options

Military Retirement Benefits

The military retirement system is the primary source of retirement savings for many in uniform. You have other options, but this is the one you’ll likely think of first when starting a military career.

You may be disappointed if you hope to find a military retirement pay chart. Instead of a chart, military retirement pay is calculated using the formulas specific to each type of retirement option.

Those who join the military today are automatically entered into the Blended Retirement System.

  • Blended Retirement System: A DoD contribution worth 1% of basic pay to a Thrift Savings Plan (TSP) 60 days after starting duty. An additional 4% matching contribution may be possible to TSP beginning after 2nd year of service through 26th year of service. Those the VA determines “otherwise qualify for a retirement based on longevity of service” may receive 2.0% X the number of years of service X the highest 36 months of basic pay.
  • Final Pay: 2.5% X the number of years of service X final basic pay on the day of retirement.
  • High-36: 2.5% X the number of years of service X the average of the highest 36 months of basic pay.
  • CSB/REDUX: Career Status Bonus $30,000 lump sum payment at 15th year of service in exchange for a commitment to serve until retirement. Before age 62 the benefit is 2.5% X the number of years of service minus 1.0% for each year of service less than 30, X the average of the highest 36 months of basic pay. Age 62 and older, 2.5% X the number of years of service X the average of the highest 36 months of basic pay
  • Disability Retirement: Retired Pay Base X Multiplier. The Retired Pay Base is under the individual program; Final Pay, High-36, or BRS depending on the entry date. The multiplier is either: Servicemembers’ percentage of disability or years of creditable service X 2.5% or 2.0%. This is based on whether the member was in a legacy retirement program or the Blended Retirement System before the disability. No matter which option is available, the multiplier is limited to 75% by law.

The rules for members of the Guard and Reserve are more unique where retirement pay is concerned.

Read more: Military Retirement Pay for Guard and Reserve Explained

How The Blended Retirement System (BRS) Works

BRS was created by the Fiscal Year 2016 National Defense Authorization Act. Those who join the military from 2018 forward are automatically enrolled in BRS.

This program combines features of the legacy military retirement pension system with a defined contribution benefit applied to the service member’s Thrift Savings Plan account (see below.)

Eligibility for Blended Retirement System

Your eligibility depends on when you joined the service.  If you:

  • Joined on or after January 1st, 2018, you are automatically enrolled into the BRS.
  • Served on active duty for 12+ years before December 31st, 2017; VA.gov says, “You may have been grandfathered into the legacy retirement system. Nothing will change for you.”

Read more: Blended Retirement System: An Overview

Thrift Savings Plan (TSP)

TSP is a retirement investment program open only to military and federal employees. It is described as a “defined-contribution plan” similar to retirement plans offered by companies in the private sector, such as 401(k) options.

  • TSP contributions may earn tax breaks; they can be rolled over from a 401(k) or IRA into a TSP if you leave the private sector.
  • You may also be allowed to roll over TSP funds into an IRA or 401(k) if your career takes you in the opposite direction.
  • According to TSP.gov, “Your automatic enrollment in the TSP begins after 60 days of service.”
  • At that time, your service begins deducting 5% of your basic pay each pay period from your paycheck and deposits it into the traditional balance of your TSP account.”

Why did the federal government switch to this option from its legacy military retirement pay system? According to the Defense Department, “Under the traditional system, only those who serve 20 years receive a retirement benefit.”

According to the DoD, roughly 81% of service members leave without retirement benefits. “Under the Blended Retirement System, about 85% of service members will receive a retirement benefit, even if they don’t qualify for full retirement.”

Read more: Thrift Savings Plan: An Overview

Investment Options

Individual Retirement Accounts

You aren’t limited to TSP savings; military members may also use Individual Retirement Accounts or IRAs to add more toward retirement. These investments may allow you to delay paying taxes on these funds until they are withdrawn, and there are annual contribution limits for IRAs.

Investopedia reports that in 2022, service members could contribute up to $6,000 to a traditional or Roth IRA. The maximum contribution was increased to $6,500 for 2023. These numbers are provided as a reference only; they are subject to change yearly. Consult a tax professional if you aren’t sure about the amounts in the current tax year.

Investopedia reminds us, “Traditional IRA contributions may be tax-deductible, while Roth IRAs offer the benefit of tax-free withdrawals in retirement.”


If you receive a regular source of income or a lump-sum payment of insurance policies during retirement, you’re drawing an annuity. Some of these may be tax-deferred investments, and some may not. Consult a tax professional about your options for investing in annuities with an eye on military retirement.


Buying a share of a publicly-traded company isn’t a retirement-only financial practice, and some don’t think of stocks in the long-term the way you might a Savings Bond or Treasury Bond. But some like buy-and-hold stock investment strategies as another way to add to retirement funds later on.

If you are interested in buying stocks with retirement in mind, talk to a financial advisor about long-term investment strategies to help you realize these goals. Some investment approaches are all wrong for retirement planning, do you know which ones are which? It pays to ask a pro.


Bonds are, in essence, the money you loan to a government entity or a corporation. What do you get in return? Interest payments and eventual repayment of the bond’s face value once it matures.

Bonds are another investment not exclusive to retirement planning but a means to invest in a lower-risk, fiscally conservative way. Some use their military pay charts to set up a specific amount of savings bond purchases that correspond with the time-in-grade raises they get along the way; others make a budget to buy a specific number of bonds each year regardless of whether they have gotten a military pay raise that year or not.

Mutual Funds

The investment approaches we’ve mentioned above can be for single stocks or bonds, but mutual fund investing involves professionally managed groups of stocks and other investments that are part of that fund’s portfolio.

Your investment may be divided over a number of these financial instruments to diversify and protect the investment money from a single failed investment or a stock that loses its value. Mutual funds have a sliding scale or risk depending on how conservative or bold the investment strategies are for that particular fund.

What’s Next

There are other options and strategies, but for the newcomer just starting to consider the financial journey toward retirement, these options are plenty to get started researching. Once you have settled on some basic options, you can move on to more complex investment options if you have the time and inclination.

Read more: Military Retirement Pay Explained

About the author


Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.