Calculating Military Retirement Benefits Will Make Your Head Hurt in Hampton, VA

One of the more complicated topics for a military spouse going through a divorce is how to calculate her marital share of the servicemember’s retirement. Before we even get to that, we need to be able to calculate what the actual, total military retirement amount is going to be. This topic will make your head hurt…I promise. Because it is so complicated, I will be dedicating multiple posts to cover the Military Retirement issue.

As if calculating a military retirement wasn’t complicated enough, the military has made calculating a Reservist’s retirement even more complicated. But that is for another post. If there were any way to make this whole thing more complicated, I think the military would have gladly tried it! The good news in all of this is – if you can come to terms with the general principles involved, all military retirements function much the same way.

So let’s start off with the basics…

All branches of the armed services participate in a unified retirement system. In very simple terms, we are talking about a pension that will be paid to the servicemember upon retirement – and this pension will continue to be paid until the servicemember dies. As the law now stands, retirement for enlisted personnel, warrant officers and commissioned officers is earned after twenty years of active duty service.

To compute the amount of retired pay, first you must determine when your servicemember husband (or you as the female active duty servicemember) came on active duty. If this date was sometime between 1980 and 1986, the “High-3” formula is used to compute retired pay. If this date was after August 1, 1986, then there are two options for retirement: either 1) the High-3 formula, or 2) what is commonly referred to as REDUX.

“High-3” simply means that the retired pay is based on the average of the last 36 months’ pay before retirement. The formula is then computed at 2.5% times years of service times average of highest 36 months of basic pay (or 2.5% x yrs. of service x high 3 avg. pay).

“REDUX” is a little more complicated. REDUX means that the servicemember collected a bonus of $30,000 paid between the servicemember’s 14.5 and 15th year of service with a promise by the servicemember to remain on active duty until 20 years. This is known as the Career Status Bonus. This bonus affects the retired pay because the monthly retired pay is then calculated at 40% of the average of the highest three years of basic pay after 20 years of creditable service.

To make matters a bit simpler, what you really need to know is whether your servicemember spouse received this Career Status Bonus or not. If he didn’t, then you just worry about the High-3 formula. If he did, then the equation gets a little more complicated – particularly if he did more than 20 years of service (because that 40% multiplier under this REDUX plan will increase by 3.5% per year for every year of service after 20).

To make matters really simple – if and when the servicemember retires, he or she receives a pay stub much like the LES statement I talked about in an earlier post. Everything is documented and easily dissectible.

So – now that you know the basics on how the actual retirement is calculated, let’s talk about your marital share of it – if you are the military spouse. First, there is no law out there that says if you were married for x number of years you are entitled to a specific percent of the retirement. The good news is that many attorneys use the following formula to give clients a basic idea or ballpark way of knowing how Judges are likely to rule on the spouse’s share of the pension. This formula is calculated:

1. of years of marriage while the servicemember was serving in the military (numerator) divided by # of years of total military service to retirement by the servicemember (denominator) multiplied by 50%.

So for example, if you were married to a servicemember for 8 years while he was on active duty and the servicemember completed 20 years of active duty total service, the formula would be as follows:

8/20 x 50% = .20 or 20%

You would then receive 20% of your ex-husband’s military pension every pay period until he died. If you wanted those payments to continue beyond his death, you would need to sign up for something called the Survivor Benefit Plan – and that will be a topic for another day!

As I mentioned in the beginning, all of this retirement talk can make your head hurt. If you can grasp the basic concepts above, you will be head and shoulders above most anybody learning about military pensions.
A skilled attorney who specializes in military divorces can walk you through your specific case and let you know exactly what you are looking at. One of the nice things about military pensions is that they are viewed as an earned property right. This means that once a court awards you your share of the military pension – it is not modifiable. Unlike spousal support or child support, your ex-husband will not be able to petition the court to reduce your share later. I hope that makes your head hurt a little less!

There are very specific rules governing divorce in Virginia. At Hofheimer Family Law Firm we are committed to providing you with the experience and compassion you deserve and the successful results you need to move on with your life. Request a FREE copy of our divorce guide for women in Virginia, or reserve your seat at our monthly divorce seminar – 757-425-5200.