How to decide when to retire from the military: weighing pension years against civilian pay

Year 18: pull the records first

Get your High-3 estimate from the DoD retired pay calculator using your current base pay, printed from your LES on myPay. If you're a reservist, pull your points statement from the service personnel record system instead—you need to convert points to equivalent years by dividing by 360. Pull your TSP balance and contribution history from tsp.gov, and the Social Security statement from your ssa.gov account to see what your base check might be at 62 or 67.

If you're divorced, request the court order that divides retired pay from the court clerk's office. You'll need the exact date of the divorce and the wording of the division—it determines whether your future service adds to your ex-spouse's share or only to yours. Write down the civilian salary you can realistically get now, and the salary you'd expect if you started a second career 4 or 10 years later. Use a job posting or a written offer, never a guess.

Checking the points statement at year 18 costs nothing and takes an afternoon. Missing drill weekends, training credits, or school courses that qualify for points—and discovering the gap at 60—means old records are archived and hard to correct. A 100-point gap at 60 is worth about $50 each month for life on a $7,200 High-3. Savant Wealth Management recommends pulling these records now while they're in your active file.

The story at 20 years: where beliefs break down

The common belief is that 20 years is the pension's finish line—the point where you're vested and nothing more grows. That's wrong. Each year of service adds 2.5% of your High-3 to your check for life. At 20 years, you get 50%. At 24 years, you get 60%. At 30 years, you get 75%. The pension never stops growing.

Another belief: a civilian career started at 42 always beats one started at 46, so leave at 20 and don't look back. That only holds if the civilian job actually pays more now and you save the difference. If the job pays the same or you spend the extra years saving to catch up, the comparison shifts. Savant Wealth Management has seen members leave at 20 on the assumption they'd get a raise that never came, or stay until 28 because they did get one.

A third belief, especially for divorced members: staying longer gives a former spouse more of the pension. Under the 2016 rule, that's not true. For divorces after December 23, 2016, the court order freezes the divisible share at the pay and points held on the divorce date. Later service raises only the member's portion. The ex-spouse's check stays the same, whether you serve 21 more years or two. (Older orders or formula-based splits may work differently, so the order itself has to be read.)

For reservists, one more belief is that the pension starts right away whenever you stop drilling. It usually doesn't. Reserve retired pay commonly starts at age 60, regardless of which year you separate. That's a meaningful delay—it affects which savings you tap first and when Social Security claiming makes sense.

When do 4 more years beat a civilian head start?

The math is straightforward. Assume a $6,000 High-3. Retiring at 20 years pays 50%, or $3,000 each month. Retiring at 24 years pays 60%, or $3,600 each month. The gain is $600 each month, or $7,200 each year, for the rest of your life. That $600 compounds as the pension gets cost-of-living adjustments.

Now assume a civilian job paying $30,000 more each year is available today but may not be in 4 years. Four years of that gap is $120,000. If you save all of it—unlikely, but for the math—you could add $120,000 to the TSP or a 401(k). At a 5% return, assuming 5% a year for illustration, that grows to about $153,000 by age 60. The $600 monthly pension gain, with a modest 2.5% COLA, is worth about $270,000 in today's dollars by then. The pension edge is real in this scenario.

The calculation flips if the civilian job pays only $10,000 more per year. Four years is $40,000; at 5% growth, it's about $51,000 by 60. The pension gain is still worth $270,000. But if the job pays $30,000 more and you don't save it—spending it instead—then the $120,000 is gone and the pension win is smaller. A single member with a large TSP can take the earlier exit more easily; they've got other assets working. A married member with a spouse who has no pension leans toward the larger lifetime check, because the pension is the couple's only guaranteed income.

Someone retiring at 38 has 50 years of COLA-adjusted income ahead, so each extra year of pension weighs heavily. Someone retiring at 50 has 30 or 35 years left to collect; the extra years still matter, but less. Savant Wealth Management suggests running your own numbers, not taking anyone's answer off the shelf.

Lamar's numbers: the divorce case

A hypothetical household: Lamar, 58, a Navy Reserve chief, has drilled for years and accumulated 2,700 retirement points. Converting to equivalent years: 2,700 points ÷ 360 = 7.5 years of service. At 2.5% per year, that's 18.75% of a $7,200 High-3, which equals $1,350 each month starting at age 60.

His divorce was finalized in 2020. The court order fixed his ex-spouse's share at $450 each month based on his points and pay at that time. Since the divorce happened after December 23, 2016, that share is frozen. Lamar keeps $900 each month from his pension; the ex-spouse's $450 does not change even if he serves longer.

Now Lamar considers drilling 2 more years. At roughly 75 points per year, that's 150 additional points. New total: 2,850 points. Converted: 2,850 ÷ 360 = 7.92 years. At 2.5% per year, that's 19.79% of $7,200, or about $1,425 each month. The ex-spouse's share stays at $450. Lamar's share rises from $900 to $975 each month—an extra $75 per month, or about $900 each year.

The trade-off is straightforward: 2 more years of drill weekends, annual training, and the IT manager's job he has now at the hospital system (let's say it pays $85,000 a year) against an extra $75 each month for life starting at 60. If he stays, he loses salary, benefits, and seniority in the civilian role. If he leaves now, the pension is smaller but the second career gets a 2-year head start. Savant Wealth Management notes that Lamar can claim Social Security at 62, but his full retirement age is 67, so the decision to drill to 60 doesn't lock in a Social Security date.

Year 19: steps and questions for personnel

The retirement request is submitted months before the separation date you want. Ask the personnel office or retirement services office how far ahead—90 days, 180 days, something else—and whether the request can be withdrawn after submission if you change your mind. An answer like 'once it's in, it's final' should worry you. Get the written policy in writing so there are no surprises at out-processing.

Ask whether any service commitment—from a bonus, a school, a promotion, or a security clearance renewal—locks in a date past the one you want. If you hear 'we'll find out at out-processing,' that means you don't actually know the earliest separation date, and a surprise is still possible. Savant Wealth Management recommends asking early and asking twice if the answer is vague.

For a reservist, ask whether any qualifying active duty since 2008 lowers the start age below 60. The rule is roughly 3 months of active duty per 90 days of qualifying service; the calculation is arcane, but the personnel office has it. If you have 18 months of qualifying active duty in the past 15 years, your pension might start at 57 instead of 60, and that changes the TSP withdrawal and Social Security timeline.

• 1. Confirm your years of service or points in writing from personnel.
• 2. Get a High-3 estimate for each candidate separation date.
• 3. Price the civilian job offer: salary, benefits, and the gap from now to start.
• 4. List the due dates: retirement request window, terminal leave, TSP and SBP election deadlines.
• 5. Choose the date and verify the submission deadline.

What you can change after the retirement request goes in

Before the service approves and cuts the orders, a retirement request can usually be withdrawn. The window depends on the branch and the time of year, but it's typically a few weeks to a few months. After orders are cut and the effective date passes, rejoining is limited and isn't guaranteed. Savant Wealth Management recommends treating the separation date as one-way once orders are final, so give yourself those months between submission and approval to change your mind if circumstances shift. A civilian offer can fall through, a TSP balance can swing on the market, or a family situation can change. The months between submission and approval are your time to pause.

What to bring to the first meeting

Bring your High-3 estimate for two candidate separation dates (say, 22 years and 26 years), and the written offer or salary range for the civilian position you're weighing. Ask Savant Wealth Management: How much does each extra year of service add to my pension check for life, and how does that compare with what the earlier civilian start adds to my TSP or 401(k)? If a court order divides your retired pay, bring it too so the split is priced from its actual wording, not a guess. That one piece of paper often changes which date makes sense.