| Assumptions for both examples |
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| Join
the Military in the Enlisted Ranks, start as an E-1, Retire as an
E-7 |
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| Life
expectancy is 77 years |
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| Active
Duty Pay for an E-7 with 20 Years of Service = |
$3,341.70 |
(per
month) |
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(Jan 2004 Pay Scale) |
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| Active
Duty Member |
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| Example:
Join Military at Age 18, Retire at 38 Years Old as an E-7 (average
enlisted retirement rank) |
| Active
Duty Pay for an E-7 with 20 Years of Service = |
$3,341.70 |
(per
month) |
|
| Years
= 20 (20*365)= |
7,300 |
Days Served |
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| Monthly
Retirement Pay 50% of Active Duty Pay = |
$1,670.85 |
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| Collect
Retirement Pay for 38 Years (77-38) |
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$761,907.60 |
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| Served
7,300 Days (20*365) |
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| Total
Retirement Pay Per Day Served = |
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$104.37 |
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| Thus,
the average enlisted member, who serves 20 years of active duty and
lives until age 77 |
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| will
receive, over their lifetime, $104 in retirement pay for every day
they served on active duty. |
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| Guard/Reserve
Member |
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| Example:
Join Military at Age 18, Serves 4 Years on Active Duty |
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| Serve
16 Years in the Guard/Reserve for a Total of 20 Years of Service |
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| Years
= 4 (4*365)= |
1,460 |
Days Served on Active Duty |
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| Years
= 16 (16*38)= |
608 |
Days Served in
Guard/Reserve (2 days/month plus 2 weeks per year) |
| Total
Days Served= |
2,068 |
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| The
Point System |
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|
Guard/Reserve Retirement is
based on a "points' system. |
| Active
Points: |
1,460 |
(4*365) |
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| Guard
Points: |
1,184 |
(16*74) |
The average number of points received is 74/year. |
| Total
Points: |
2,644 |
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2644/365 = |
7.24383562 |
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The Formula is Total Points
Divided by 365. |
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0.18109589 |
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Times .025 |
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$3,341.70 |
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Times Military Pay for that
Grade |
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| Monthly
Retirement = |
$605.17 |
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| Yearly
Retirement = |
$7,262.02 |
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| For
17 Years = |
$123,454.30 |
(77-60) |
Not Elgible
for Retirement Pay until Age 60 |
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| Total
Retirement Pay |
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| Per
Day Served = |
$59.70 |
( |
$123,454.30 |
divided by |
2,068 |
) |
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| Thus,
the average Guard/Reserve member, who serves 4 years of active duty
and 16 years in the |
| Guard/Reserve
and lives until age 77 will receive, over their lifetime, $59 in
retirement pay |
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| for
every day they served on active duty. |
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