Reserve Retirement Rules and Misinformation

[Chida]

Due to a lot of misinformation from Regular Retirees and ARPC not being clear on Reserve Retirement rules and having run into more than a couple reservists telling me they stayed in the SELRES/ANG for 24 years in order to "max the pay chart" for retirement, and I think, obviously the ARC enjoying that people do not understand and therefore serve additional years unnecessarily, I am compelled to write this and wish it to become common knowledge for anyone seeking a reserve retirement.

The only stipulation to carry O-5 into retirement is serving on the Reserve Active Status List for 3 years Time in Grade. Now it is unclear that if those 3 years are only years on the RASL or if those 3 years need to be *good* years on the RASL. I would not want to press to test on this nuance, so let's say that those 3 years TIG need to be good years.

The biggest distinguishing feature of the Reserve Retirement is that once you transfer to the retired reserve (AKA grey area) your years of service for the purposes of determining your high 36 continue to accrue until you reach age 60 (or whatever your age is for reduced reserve retirement).

The reason that your finance office or ARPC will tell you that they have no idea what your reserve retirement pay will be and then refer you to any number of online calculators (which btw are designed for regular retirement and commonly misused by prospective reserve retirees) is because the calculation requires a look-back of 36 months and no one knows what the future pay charts will say. However, to get a pretty good idea we can use an example of a grey area retiree who reaches age 60 today (1 Apr 2019) and I will outline below what that looks like right now.

The formula for calculating a reserve retirement: points/360*"high36"*.025. This gives you your monthly pay. Now the confusion arises as to what high-36 is. High 36 for our guy who is now 60 years old as of 1 Apr 2019 and entered the grey area 18 years ago at 42 years of age, he now has 38 years on the pay chart, thus maxing out the pay chart for O-5.

He will have 36 months at $9521 (2019 pay chart is used for all 36 months), for a high 36 average of $9521. Assuming he has 5000 points, his retirement monthly pay will be 5000/360*$9521*.025=$3306. This math can be verified by the point valuation chart published by DFAS for 2019. Here is a link to the point valuation chart (Mypers): https://mypers.af.mil/ci/fattach/get/9805796/1553879360/redirect/1/filename/2019_POINT_VALUATION_FOR_RETIREMENT_BENEFITS_RESERVIST_AND_GUARD_MEMBERS.pdf

Again, this is assuming he had 3 years TIG as an O-5 at his 20 years TIS. There is no need to serve in the SELRES/ANG for more than the time it takes to get 3 years TIG. The only online calculator that I have found that will give a correct answer is on the VPC Dashboard (accessed via Mypers). Main takeaway is that your years in service are all years on the active status list (both regular and reserve) plus the years spent in the grey area.

If for some reason you do not get 3 years TIG as an O-5 on the active status list, you will enter the grey area as an O-4 (assuming you didn't get the 2 yr waiver) and then your retired pay will be based on maxing out the O-4 pay charts.

Here is a link from ARPC that explains all the above in fairly confusing (to me, anyway) language: https://militarypay.defense.gov/Pay/Retirement/Reserve.aspx

Info about transferring from active status to retired reserve (grey area): https://mypers.af.mil/app/answers/detail/a_id/14270

Also see the attachment which dispels additional rumors I've heard such as a regular retiree with IDT points gets a retirement re-calculation at age 60. I don't know how that rumor got started, but it's false. This is the 1405 service mentioned in the power point.

 

Retirement_explained.pdf

Edited March 30, 2019 by Chida

[Disco_Nav963]

On 3/30/2019 at 10:25 AM, Chida said:

Due to a lot of misinformation from Regular Retirees and ARPC not being clear on Reserve Retirement rules and having run into more than a couple reservists telling me they stayed in the SELRES/ANG for 24 years in order to "max the pay chart" for retirement, and I think, obviously the ARC enjoying that people do not understand and therefore serve additional years unnecessarily, I am compelled to write this and wish it to become common knowledge for anyone seeking a reserve retirement.

The only stipulation to carry O-5 into retirement is serving on the Reserve Active Status List for 3 years Time in Grade. Now it is unclear that if those 3 years are only years on the RASL or if those 3 years need to be *good* years on the RASL. I would not want to press to test on this nuance, so let's say that those 3 years TIG need to be good years.

The biggest distinguishing feature of the Reserve Retirement is that once you transfer to the retired reserve (AKA grey area) your years of service for the purposes of determining your high 36 continue to accrue until you reach age 60 (or whatever your age is for reduced reserve retirement).

The reason that your finance office or ARPC will tell you that they have no idea what your reserve retirement pay will be and then refer you to any number of online calculators (which btw are designed for regular retirement and commonly misused by prospective reserve retirees) is because the calculation requires a look-back of 36 months and no one knows what the future pay charts will say. However, to get a pretty good idea we can use an example of a grey area retiree who reaches age 60 today (1 Apr 2019) and I will outline below what that looks like right now.

The formula for calculating a reserve retirement: points/360*"high36"*.025. This gives you your monthly pay. Now the confusion arises as to what high-36 is. High 36 for our guy who is now 60 years old as of 1 Apr 2019 and entered the grey area 18 years ago at 42 years of age, he now has 38 years on the pay chart, thus maxing out the pay chart for O-5.

He will have 36 months at $9521 (2019 pay chart is used for all 36 months), for a high 36 average of $9521. Assuming he has 5000 points, his retirement monthly pay will be 5000/360*$9521*.025=$3306. This math can be verified by the point valuation chart published by DFAS for 2019. Here is a link to the point valuation chart (Mypers): https://mypers.af.mil/ci/fattach/get/9805796/1553879360/redirect/1/filename/2019_POINT_VALUATION_FOR_RETIREMENT_BENEFITS_RESERVIST_AND_GUARD_MEMBERS.pdf

Again, this is assuming he had 3 years TIG as an O-5 at his 20 years TIS. There is no need to serve in the SELRES/ANG for more than the time it takes to get 3 years TIG. The only online calculator that I have found that will give a correct answer is on the VPC Dashboard (accessed via Mypers). Main takeaway is that your years in service are all years on the active status list (both regular and reserve) plus the years spent in the grey area.

If for some reason you do not get 3 years TIG as an O-5 on the active status list, you will enter the grey area as an O-4 (assuming you didn't get the 2 yr waiver) and then your retired pay will be based on maxing out the O-4 pay charts.

Here is a link from ARPC that explains all the above in fairly confusing (to me, anyway) language: https://militarypay.defense.gov/Pay/Retirement/Reserve.aspx

Info about transferring from active status to retired reserve (grey area): https://mypers.af.mil/app/answers/detail/a_id/14270

Also see the attachment which dispels additional rumors I've heard such as a regular retiree with IDT points gets a retirement re-calculation at age 60. I don't know how that rumor got started, but it's false. This is the 1405 service mentioned in the power point.

 

Retirement_explained.pdf 2.62 MB · 18 downloads

4 year thread bump... and two questions

I'm 3 years out from having 20 good years, and a non-BRS High-36 IMA doing not much more than the minimum (~30 days of MPA on top of 24 IDTs and AT, just because I like the change of pace)... Will pin on O-5 next month at 7 YTIG, so to retire as an O-5 I gather I need to 3 (possibly good) more years on the RASL as an O-5? Is that years during which I'm on the RASL (i.e. my R/R years ending May 2024, 2025, and 2026) or I need to be an O-5 on the RASL for the 36 months after I pin on (so through September of 2026)? If the latter, do I just need to get my 50 points between May and September of '26 and put in the retirement paperwork, or would I need to be on the books (albeit being done participating) through May '27?

Also, from your explanation it sounds like any good year counts as a full year for purposes of which part of the pay chart my High-36 is computed? So while at 20 years I'll have around 6100 points (/360 = 16.9 x 2.5) = ~42% for multiplier purposes, I'd be entering the gray zone as a 20-year O-5 and accumulate additional "years of service" the whole time I'm in the gray zone, yes? (You said that in plain language, but the OSD Military Pay website's language is so confusing I wanted to double check.)

Now here's the rub: with reduced retirement pay age I can collect at 50 rather than 60, so theoretically I could min run in a participating status for another 8 years (until MSD for an O-5) and bypass the gray zone entirely. If I understand you right, that does not impact the part of the pay chart my high 36 is computed against, it just means I accumulate a few more points along the way... Doing my annual requirement only, it looks like that would get me to a ~45% multiplier against the same part of the pay chart? (Btw, I'm a WSO turned contractor, non-airline pilot, so I lose a little money when I participate but not nearly as much as many folks on this forum.) For me my Reserve experience doesn't totally suck and Tricare Reserve Select is the best bargain I can find on health insurance, so this seems potentially a good plan--am I missing anything?

In other words, if I never make O-6, staying in another 8 years past retirement eligibility gets me an extra $3,900 per year in gross retirement pay based entirely on the difference between a 45% and a 42% multiplier against the same part of the pay chart.

(And if I was the best of the available and made O-6—although I'm guessing O-6 jobs where you can min run participation are few and far between?—it looks like an additional $13K in gross annual retirement pay based on retiring at 28 years with the same 45% multiplier?)

Trying to weigh the pros and cons of financial safety blanket + higher retirement pay + TRS availability vs. being a free American with the ability to get a really dumb haircut and smoke weed at the 69th Grateful Dead farewell tour.

[Chida]

ARPC says exactly 3 yrs TIG as an O-5 in a participating status (not simply on the RASL bc they want to specifically exclude IRR time) to hold that in the retired reserve, ie (365.25*3) days. So six months prior to achieving that you can apply for transfer to RetRsv.

I don’t know if or how good years enter into the equation and ARPC itself doesn’t know or won’t say. It is my opinion that the safest thing is to get at least 50 pts per R/R year while trying to get TIG. And then if you’re past 20 good yrs and it’s your final R/R yr then a prorated partial good year (if you are looking to retire immediately after attaining 3 yrs TIG).

You’re correct that once you have TIG it is only a points game. Or you might make O-6, then need 3 yrs TIG for that, then it again becomes only a points game.

You’ll max out the pay chart in terms of years bc gray area time counts as TIS (for pay chart purposes only).

Edited August 6, 2023 by Chida