How Much Does a Lt Colonel Make in Retirement?

Military retirement pay is a lifelong financial benefit provided to service members who complete specific eligibility requirements, typically centered around a minimum number of years served. This benefit functions as a defined benefit pension, offering a predictable income stream throughout a retiree’s lifetime. It provides financial stability and recognition for those who dedicate their careers to military service.

Understanding Influencing Factors

The specific amount of a Lieutenant Colonel’s military retirement pay is shaped by several factors: their retirement system, total years of creditable service, and pay grade. Each element plays a distinct role in determining the monthly annuity.

Military personnel may retire under different systems, depending on their entry date into service. The “High-3” system applies to those who entered service between September 8, 1980, and July 31, 1986, or those who entered on or after August 1, 1986, and did not choose the Career Status Bonus (CSB)/REDUX system. The REDUX system was an option for service members who entered on or after August 1, 1986, but before January 1, 2003, and elected to receive a Career Status Bonus. The Blended Retirement System (BRS) became the default for those who entered service on or after January 1, 2018, combining a reduced pension with government contributions to a Thrift Savings Plan (TSP).

The number of creditable years of service directly impacts the retirement multiplier used in pension calculations. A minimum of 20 years of active duty service is required to be eligible for military retirement pay. For a Lieutenant Colonel (O-5), additional years of service beyond 20 significantly increase the retirement annuity, as each year contributes to a higher percentage of their basic pay.

A service member’s pay grade, specifically O-5 for a Lieutenant Colonel, directly influences the basic pay figures used in retirement calculations. Retirement pay is derived from a “retired pay base,” which is the average of the highest 36 months of basic pay earned during their career. For an O-5, this often corresponds to the basic pay earned during their final three years of service.

Calculating Retirement Annuity

The calculation of a Lieutenant Colonel’s monthly retirement annuity varies based on their retirement system, applying distinct formulas to the retired pay base and years of service. Each system has its own multiplier that affects the final monthly amount before deductions or taxes.

Under the High-3 system, the retirement annuity is calculated by multiplying 2.5% by the years of creditable service, and then multiplying that result by the average of the highest 36 months of basic pay. For example, if a Lieutenant Colonel (O-5) retires with 20 years of service and a highest 36-month average basic pay of $10,800, their monthly annuity would be (0.025 20) $10,800 = $5,400. With 25 years of service and an average basic pay of $11,800, the annuity would be (0.025 25) $11,800 = $7,375. If they serve 30 years with an average basic pay of $12,800, their annuity would be (0.025 30) $12,800 = $9,600.

The REDUX system, an option for those who entered service between August 1, 1986, and January 1, 2003, and elected the Career Status Bonus, calculates retirement pay with a reduced multiplier. For those retiring at exactly 20 years, the multiplier is 2.0% per year of service, resulting in 40% of the highest 36 months of basic pay. For years beyond 20, an additional 3.5% multiplier is applied for each year up to 30 years of service. For instance, an O-5 with 20 years of service and a $10,800 highest 36-month average basic pay would receive (0.020 20) $10,800 = $4,320. If they completed 25 years, the calculation would be (0.020 20 + 0.035 5) $11,800 = $6,785. For 30 years of service, the annuity would be (0.020 20 + 0.035 10) $12,800 = $9,600.

The Blended Retirement System (BRS) utilizes a multiplier of 2.0% for each year of service, multiplied by the average of the highest 36 months of basic pay. This means a Lieutenant Colonel retiring under BRS with 20 years of service and a $10,800 highest 36-month average basic pay would receive (0.020 20) $10,800 = $4,320. With 25 years of service and an $11,800 average basic pay, the annuity would be (0.020 25) $11,800 = $5,900. For 30 years of service and a $12,800 average basic pay, the annuity would be (0.020 30) $12,800 = $7,680. These calculated amounts represent gross annuities and do not account for federal or state income taxes, which will reduce the net monthly payment.

Other Retirement Entitlements

Beyond the monthly retirement annuity, military retirees, including Lieutenant Colonels, are entitled to other benefits that contribute to their overall financial and healthcare security. These entitlements are a valuable part of the retirement package, providing continued support after active duty.

Healthcare coverage is a primary entitlement for military retirees through TRICARE. Eligible retirees can enroll in various TRICARE plan options, such as TRICARE Prime or TRICARE Select, which offer comprehensive medical, pharmacy, and dental benefits. While active duty service members have no out-of-pocket costs for TRICARE, retirees pay annual enrollment fees, deductibles, copayments, and cost-shares depending on their chosen plan and group. For example, in 2025, a retiree in Group A (those who entered service before January 1, 2018) enrolled in TRICARE Prime might pay an annual family enrollment fee of $744, while those in TRICARE Select might pay $364.92.

The Survivor Benefit Plan (SBP) is another important entitlement that allows retirees to provide a continuous, inflation-adjusted monthly income to eligible survivors after their death. Participation in SBP involves a deduction from the retiree’s gross monthly retirement pay, with the cost depending on the elected coverage level. The SBP annuity can provide up to 55% of the service member’s retired pay to a spouse or eligible children, offering a financial safety net to dependents. Premiums for SBP are paid from gross retired pay, which means they are not counted as taxable income, reducing the effective out-of-pocket cost.

Military retirement pay also receives annual Cost-of-Living Adjustments (COLA) to help maintain purchasing power against inflation. The COLA is determined by the percentage increase in the Consumer Price Index (CPI) and is applied to most retired pay and SBP annuities, typically effective December 1st each year. For 2025, the COLA for most military retirees was set at 2.5%. However, retirees under the REDUX system receive a reduced COLA, usually one percentage point less than the adjustment for other retirement plans, though they receive a one-time catch-up adjustment at age 62.

Military retirees retain access to various facilities and services, which can offer significant financial advantages. These include shopping privileges at commissaries (military grocery stores that sell goods at cost plus a 5% surcharge) and exchanges (department-like stores offering tax-free goods). Retirees can also utilize Morale, Welfare, and Recreation (MWR) facilities, which include a range of recreational activities such as golf courses, bowling centers, and movie theaters on military installations.