How Much Is E7 Retirement Pay With 24 Years?

Military retirement pay is a defined benefit earned by eligible service members. For an E-7 with 24 years of service, the amount depends on the applicable retirement system, calculation method, and various deductions. This article explores these components to help estimate potential retirement income.

Understanding Military Retirement Systems

Military retirement benefits are governed by the system a service member falls under, determined by their entry date. For individuals with 24 years of service, the most relevant systems are typically the High-3 system and, for some, the REDUX system. These systems dictate the multiplier used in calculating retirement pay and how cost-of-living adjustments are applied over time.

The High-3 retirement system is the prevailing plan for those who entered military service before January 1, 2018, and did not elect to switch to the Blended Retirement System (BRS). Under High-3, a service member’s retirement pay is calculated based on the average of their highest 36 months of basic pay.

The REDUX retirement system was an option for service members who entered between August 1, 1986, and December 31, 2000, and chose the Career Status Bonus/REDUX at their 15-year mark. This system features a lower retirement pay multiplier and different Cost of Living Adjustment (COLA) rules, which can result in a lower overall benefit compared to High-3 over a full retirement. Service members typically made this election in exchange for a one-time cash bonus at the 15-year point.

The Blended Retirement System (BRS) was implemented in 2018, combining elements of a traditional defined benefit with a defined contribution plan. However, for an individual with 24 years of service, the BRS is generally not applicable. Service members with such extensive careers would have already accrued significant time in service by 2018, making them ineligible for automatic enrollment and unlikely to have opted into BRS during the transition period.

Calculating Gross Retirement Pay

Gross retirement pay is the foundational amount before deductions or taxes. This calculation relies on specific formulas tied to the retirement system, the service member’s highest basic pay, and their creditable years of service. For an E-7 with 24 years of service, the process involves applying the appropriate multiplier to their average highest basic pay.

Under the High-3 system, the gross monthly retirement pay is determined by multiplying the average of the highest 36 months of basic pay by 2.5% for each year of creditable service. Creditable service refers to the total number of years and months a service member has served in an active-duty capacity, ending with an honorable discharge. For example, if an E-7 with 24 years of service has an average highest 36 months of basic pay of $6,356.70 (based on 2025 pay charts for an E-7 over 24 years of service), the calculation would be $6,356.70 multiplied by (24 years 0.025), which equals $6,356.70 0.60. This results in a gross monthly retirement pay of $3,814.02.

The formula for High-3 can be summarized as: (Average of Highest 36 Months of Basic Pay) x (2.5%) x (Years of Creditable Service). The “highest 36 months” typically represents the most recent period of service, as basic pay generally increases with rank and years of service.

For those under the REDUX system, the calculation uses a different multiplier, resulting in a lower gross retirement pay. The formula is: (Average of Highest 36 Months of Basic Pay) x (2.0%) x (Years of Creditable Service). Using the same hypothetical average basic pay of $6,356.70, an E-7 with 24 years of service under REDUX would have their pay calculated as $6,356.70 multiplied by (24 years 0.020), which equals $6,356.70 0.48. This yields a gross monthly retirement pay of $3,051.22. The 0.5% difference in the multiplier per year of service significantly impacts the overall gross retirement pay, making the REDUX system less financially advantageous in terms of monthly annuity compared to High-3.

Factors Affecting Net Retirement Pay

While gross retirement pay establishes the baseline benefit, several factors reduce this amount to determine the actual net pay a retiree receives. These factors include annual adjustments, tax obligations, and elected benefit programs.

Cost of Living Adjustments (COLAs) are applied annually to military retirement pay to help maintain purchasing power against inflation. The application of COLAs varies significantly between the High-3 and REDUX systems. High-3 retirement pay typically receives COLAs equal to the Consumer Price Index (CPI), ensuring that the retirement benefit keeps pace with inflation.

In contrast, REDUX retirement pay receives COLAs that are generally 1% less than the CPI. This means that over time, the purchasing power of a REDUX annuity erodes more quickly than a High-3 annuity. However, the REDUX system includes a one-time catch-up adjustment at age 62, where the retiree’s pay is recalculated to what it would have been under the High-3 system, and then subsequent COLAs revert to CPI-1%.

Military retirement pay is subject to federal income tax, just like other forms of taxable income. The amount of federal tax withheld depends on the retiree’s total income, filing status, and elected withholdings. State income tax treatment of military retirement pay varies widely across the United States; some states fully exempt it, while others tax it fully or partially.

The Survivor Benefit Plan (SBP) is an optional program that allows retirees to provide a continuous income stream to eligible beneficiaries, such as a spouse or dependent children, after the retiree’s death. Participation in SBP reduces the retiree’s monthly gross pay by a percentage, typically up to 6.5% of the elected base amount. This deduction ensures that beneficiaries receive a portion of the retirement pay, providing financial security for loved ones.

Other potential deductions from gross retirement pay include allotments for various purposes, such as insurance premiums for programs like TRICARE or Veterans’ Group Life Insurance (VGLI). Additionally, court-ordered deductions, such as child support or alimony, may also be withheld directly from the retirement annuity. These deductions collectively reduce the gross retirement pay to the final net amount received by the retiree.