Is Reserve Retirement Worth It? Analyzing Pay and Benefits

Reserve retirement offers a deferred benefit for individuals who serve a qualifying period in the U.S. military reserves. This system provides financial and other advantages to those who meet specific service criteria, differing in structure from active duty military retirement. Understanding the structure of this benefit can assist in long-term financial planning.

Eligibility for Reserve Retirement

To qualify for military reserve retirement, an individual must complete a minimum of 20 years of qualifying service. Each qualifying year requires earning at least 50 retirement points within an anniversary year, which typically begins on the date a reservist enters active status or is commissioned, resetting annually.

Retirement points accumulate through various forms of military participation:
15 membership points each year for being affiliated with a reserve component.
Inactive duty training, such as drill periods, with one point typically awarded per drill.
Active service, including annual training and periods of active duty for training or mobilization, accrues one point for each day served.
Successfully completing authorized correspondence courses.

While a reservist can achieve 20 qualifying years, retirement pay generally begins at age 60. However, this age can be reduced for certain periods of active service performed after January 28, 2008. For every cumulative 90 days of qualifying active duty performed in a fiscal year, the age requirement for receiving retirement pay is reduced by three months. A fundamental requirement for reserve retirement is honorable service throughout an individual’s career.

Calculating Your Reserve Retirement Pay

Calculating reserve retirement pay involves a specific formula that converts total career points into equivalent years of service and then applies a multiplier to a pay base. The primary method for calculating this pay is the “High-36” plan. This method uses the average of the highest 36 months of basic pay an individual earned during their career as the retired pay base. The 36 months do not need to be consecutive.

To determine the years of creditable service for calculation, the total accumulated retirement points are divided by 360. This conversion effectively translates the reservist’s part-time service into an active duty equivalent. For instance, if a reservist accumulates 3,600 points over their career, this translates to 10 equivalent years of active service (3,600 points / 360 = 10 years).

Once the equivalent years of service are established, a multiplier is applied. Under the High-36 system, this multiplier is 2.5% for each year of creditable service. For example, with 10 equivalent years of service, the multiplier would be 25% (10 years x 2.5% = 25%). The monthly retirement pay is then 25% of the calculated High-36 average basic pay.

Cost-of-Living Adjustments (COLAs) are applied to reserve retired pay annually, based on changes in the Consumer Price Index (CPI). COLAs are applied once retired pay begins, usually at age 60, and do not accrue during the “gray area” period between qualifying for retirement and receiving pay.

Understanding Healthcare Benefits in Retirement

Healthcare benefits are available with reserve retirement. Before reaching the age of 60, retired reservists and their families may qualify to purchase TRICARE Retired Reserve (TRR). TRR is a premium-based healthcare plan that functions similarly to a preferred provider organization (PPO) plan, offering worldwide coverage.

Upon reaching age 60, retired reservists become eligible for the same TRICARE health benefits as active duty retirees. In the United States, options include TRICARE Prime, a managed care option, and TRICARE Select, which provides a broader network of preferred providers. Enrollment in these plans requires an active election within a specific timeframe after becoming eligible.

Costs for TRICARE plans vary by plan and type of care received. TRR, being a self-purchased option, has higher monthly premiums compared to TRICARE Prime or Select available at age 60. For example, a family plan under TRR could exceed $1,000 per month. Dental and vision coverage for retired reservists and their eligible family members is available through the Federal Employees Dental and Vision Insurance Program (FEDVIP).

Exploring Other Retirement Entitlements

Beyond direct pay and healthcare, reserve retirement includes additional entitlements. Retired reservists gain access to military commissaries and exchanges, which are on-base grocery stores and department stores.

Space-Available (Space-A) travel on military aircraft allows retired personnel to fly on military flights when there are vacant seats, though travel is subject to availability and mission requirements. Space-A travel is categorized by priority, with retired reservists falling into a lower priority group than active duty personnel.

Retired reservists may also be eligible for various benefits administered by the Department of Veterans Affairs (VA). While reserve retirement status itself does not automatically confer all VA benefits, eligibility depends on specific periods of active duty service. This can include VA healthcare, home loan guarantees, and burial benefits. For instance, a VA home loan guarantee may be available to those with six years of service in the Selected Reserve who were honorably discharged or placed on the retired list.

A retired military identification card is issued to eligible reservists. This card provides access to military installations, facilities, and the various benefits associated with being a military retiree.