Understanding National Guard & Reserve Retirement Income

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If you serve the nation in the Guard or Reserves, you have the opportunity to qualify for guaranteed retirement income.

Adding Up the Points

While active duty service members aim to reach 20 years of service, Guard and Reserve members also focus on accumulating retirement points, which are then divided by 360 to determine equivalent years of service.

You can earn retirement points a variety of ways, including:

  • Monthly battle assemblies
  • Belonging to a unit
  • Serving on active duty
  • Completing correspondence courses

Similar to active-duty retirement, 20 is still the magic number. After you complete 20 years of creditable service, also known as 20 good years, you’ll receive a 20-year letter, which makes it official that you’ve qualified for retirement benefits. Be sure to keep this letter in a secure location, such as a safe deposit box.

Translating Service into Income

Guard and Reserve retired pay normally begins at age 60. However, it can begin three months early for each 90 days of qualifying active service performed during a fiscal year. Only service performed after Jan. 28, 2008 qualifies. Depending on the date you entered the service, you’re covered by one of two plans: Final Pay or High 36. If the tables below make your head spin, check out the Army’s Retired Pay Application to calculate your retirement pay estimate.

Date You Entered ServiceRetirement PlanFormula
Before September 8, 1980Final PayFinal month’s basic pay times 2.5% for each year of service (total points earned/360)
September 8, 1980 & laterHigh 36Average pay of the Highest 36 months Basic Pay times 2.5% for each year of service (total points earned/360)

Under either system, there’s a financial benefit to transferring to the Retired Reserve rather than merely being discharged since you’ll earn longevity credit for the time you spend in the Retired Reserve. Being discharged creates an even more dramatic benefit reduction under the High 36 program: In addition to the loss of longevity credit, benefits for discharged service members are calculated using the pay table in effect during the year of discharge rather than at age 60. For example, if you elected to be discharged after qualifying for retirement pay at age 42, that could mean missing out on nearly 20 pay increases!

Of course, money is only one consideration. Retired Reserve status carries the continuing possibility of being called to duty — and the decision is irrevocable.

Protecting your Benefit

When you consider the value of a lifetime of inflation-adjusted income, Guard and Reserve retired pay may be one of your largest financial assets.

Fortunately, you can prevent your loved ones from losing this income when you die through an optional government program called the Reserve Component Survivor Benefit Plan (RC-SBP). While participation isn’t free, the program is a great value considering the protection your family receives.

Military Retirement Advice

If you need help understanding how your Guard or Reserve retirement income fits into your retirement plan, contact the advice center. All of USAA’s financial advisors receive training on military benefits and their no-cost, no-obligation guidance is benefit of your USAA membership.


About The Author

George Morris

In his 40-plus-year newspaper career, George Morris has written about just about everything -- Super Bowls, evangelists, World War II veterans and ordinary people with extraordinary tales. His work has received multiple honors from the Society of Professional Journalists, the Louisiana-Mississippi Associated Press and the Louisiana Press Association. He avoids debt when he can and pays it off quickly when he can't, and he's only too happy to suggest how you might do the same.