When to retire from the military: a service member at 18 years weighing 20 against 24

Year 18: the records to pull before you estimate 20 or 24

Start with the Leave and Earnings Statement in myPay. It shows your Pay Entry Base Date, years of service and current basic pay. Use it to mark the exact month you reach 20 years and the month you would reach 24.

Next, use the DFAS military pay tables to project your highest 36 months of basic pay for each exit date. Then feed those months into the DoD retired pay calculator or your service's own retirement estimate, which turns them into a monthly figure.

Third, download the account statement from tsp.gov for the balance and contributions. A regular military compensation calculator then prices BAH, BAS and their tax advantage against a civilian salary. Reservists add the retirement points statement, because equivalent years equal total points ÷ 360.

Hiroshi at 40: staying pays back by age 61

Hiroshi, a hypothetical person, ran these numbers at 40, with 18 years in as a Navy commander. Leaving at 20 (age 42) on a $10,000 High-3 pays 50%, or $5,000 each month. Staying to 24 (age 46) on a $10,800 High-3 pays 60%, or $6,480 each month. The gap is $1,480 each month, or $17,760 each year.

Now the cost. Assume his civilian job pays about what his military pay and allowances did, so salary washes out. What's left is the forgone pension, $5,000 × 12 = $60,000 each year, plus a forgone $6,000 401(k) match. That's $66,000 each year, and $66,000 × 4 = $264,000.

The table assumes one thing: the full $264,000 is given up by age 46, and the added $17,760 begins that same year. Divide $264,000 by $17,760 and you get 14.9 years after retiring at 46, so about age 61, before taxes, COLA and growth. By age 71 the added pension totals $444,000.

Here's what the spreadsheet missed. The bigger pension gave Hiroshi a higher floor, yet in his 50s he still sold half his C Fund during a crash. Four more years of service raised his income; they did nothing for his nerves in a falling market. Stock funds can drop, and if you sell after the drop, the loss becomes permanent. His written plan now carries one rule: he calls before selling any stock fund after a drop.

The break-even also ignores taxes, COLAs, promotion odds and what the forgone pension could have earned if invested, which would push payback later.

How much more does staying to 22 or 24 pay?

Staying to 22 adds $720 each month to a $5,000 pension, and staying to 24 adds $1,480 each month. Each extra pair of years costs about $132,000 in forgone pension and match, so payback lands near age 59 for 22 years and age 61 for 24 years.

The 22-year row uses an assumed $10,400 High-3 × 55% = $5,720 each month, which is $720 more, or $8,640 each year. Then $132,000 ÷ $8,640 = 15.3 years after age 44. Same four criteria for each option: added pension, cost, payback age and years exposed to health and rule changes.

The Blended Retirement System pays 2.0% a year of service instead of 2.5%, so its payback runs longer. Another page on this site covers it.

Divide the cost of staying (forgone pension plus lost civilian benefits) by the added yearly pension. If payback takes about 15 years or more, treat the extra service as a bet on your health and on unchanged rules. Stay only if you'd want the job for its own sake.

Year 19: what to ask personnel and the new employer's HR

Your career counselor or personnel office can confirm your earliest retirement date and any active-duty service obligation tied to a school, bonus or promotion. Watch for an obligation that runs past your 20-year mark, because it can change both exit options.

Officers should ask about time in grade. Retiring at the current grade generally needs 3 years in that grade, waivable to 2 in some cases. A shortfall can mean retired pay figured at the lower grade, and that costs real money every month.

Then call the civilian employer's HR. Ask how the 401(k) match vests and whether the start date can move with terminal leave. A 3-year cliff vest means leaving before year 3 forfeits the whole match. Also ask the TSP to confirm the account can stay put after separation (it can).

The talk at home usually starts with orders

In most households the spouse or partner raises the question first, often the week new PCS orders or a deployment notice arrive. For a single member like Hiroshi, it tends to come from a parent or sibling asking when he'll 'get out.' Sit down with the break-even table and ask one thing out loud: would each of you stay the extra years even if the payback age were 75?

How long can you still change the date?

Before the retirement date, a submitted request can sometimes be withdrawn or moved, but only with approval from your service's personnel command. After the date, you can't return to add years. Ask how late a change is allowed before you give a civilian employer a start date.

The job offer is usually the less flexible side. After the date, recall is the service's decision, not yours. The Survivor Benefit Plan election is permanent except for a window between the 25th and 36th month after retired pay starts, with spouse consent. Leave sell-back is capped at 60 days over a career. Only the TSP stays fully flexible, with no deadline to move it.

In your 50s, the offer-letter math catches up

A civilian recruiter's offer letter compared a $150,000 salary with $120,000 of basic pay and called it a $30,000 raise. It ignored roughly $30,000 each year of BAH and BAS that isn't taxed. A member who leaves at 20 on that phantom raise gives up $17,760 each year of added pension for life. Catch it by comparing the offer with regular military compensation, not basic pay.

Another slip is assuming the TSP is penalty-free at 55. Under IRS rules, the exception for withdrawals before 59½ generally needs a separation date in the calendar year you turn 55 or later. Someone who retired at 46 pays a 10% penalty, so $5,000 on a $50,000 withdrawal. Check the current IRS rule for your case.

Ignoring health in the break-even is the third. If Hiroshi had died at 55, the added pension collected would be 9 × $17,760 = $159,840 against $264,000 given up, a shortfall of $104,160. A pension that pays back at 61 asks you to be around at 61.

Doing the math alone, and the part for First Command Financial Services

You can pull the LES, run the 2.5% math and divide the cost of staying by the added pension on your own. What's worth a first conversation with First Command Financial Services is pressure-testing your cost assumptions, the Survivor Benefit Plan cost on a bigger pension, and how the pension's size should change your TSP stock share. That conversation ends with the rule written into the written plan.