Military retirement pay is one of the most generous pension benefits still available to American workers. But which system you're under matters, and the math between Legacy and BRS plays out differently depending on your situation. Here's the full comparison.
Legacy High-3: how it works
The Legacy retirement system, also called High-3, calculates your monthly retired pay as: 2.5% x years of active service x average of your highest 36 months of basic pay.
At 20 years of service, you receive 50% of your High-3 average. At 30 years, you receive 75%. The maximum is 100%, reached at 40 years.
An E-7 with a High-3 basic pay average of $5,100/month retiring at 20 years collects $2,550/month starting the day after separation, regardless of age. That's $30,600/year, immediately, for life.
Legacy members receive no TSP matching from the government. You could contribute to TSP on your own, but Uncle Sam put nothing in on your behalf.
Blended Retirement System: how it works
BRS uses a 2.0% multiplier instead of 2.5%. At 20 years: 40% of High-3 instead of 50%. The same E-7 with a $5,100/month High-3 average receives $2,040/month instead of $2,550.
That's $510/month less, or $6,120/year. The difference compounds over a long retirement.
What BRS adds in exchange:
- Automatic 1% TSP contribution from the government, regardless of what you contribute
- Government matching of your TSP contributions up to 4% (on a 5% employee contribution)
- Maximum government TSP contribution: 5% of basic pay per month
- Continuation pay: a one-time cash bonus between years 8 and 12 for members who commit to four additional years of service. Typically 2.5 times monthly basic pay for active duty, though the multiplier varies by service branch and year
The break-even analysis
Whether BRS or Legacy produces more total retirement income depends on how long you invest the TSP match and what return you earn.
The annuity gap at 20 years is $510/month. To close that gap through TSP investment, you need the accumulated TSP balance (from matching contributions over your career) to generate $510/month in portfolio withdrawals indefinitely.
At a 5% portfolio withdrawal rate, you'd need about $122,000 of accumulated TSP balance from matching contributions alone to break even. A service member who joined at 18 and contributes 5% of basic pay from day one, receiving the full 5% government match, can reasonably accumulate more than that in matching contributions by year 20, especially with compound growth.
Add the continuation pay bonus (typically $12,000 to $20,000 for an E-6 to E-7 in year 8-12 on active duty), invested over the remaining years to retirement, and BRS can outperform Legacy on a total-wealth basis if you're a disciplined TSP investor.
If you spent your TSP match each year or contributed less than 5%, BRS falls behind Legacy and stays there.
2026 basic pay reference points
For context on what the percentages mean in real dollars, here are approximate 2026 monthly basic pay rates for common retirement scenarios:
- E-7 at 20 years: approximately $5,200/month basic pay
- E-8 at 22 years: approximately $5,900/month
- O-5 at 20 years: approximately $9,800/month
- O-6 at 26 years: approximately $12,200/month
Apply 50% (Legacy) or 40% (BRS) to the High-3 average, which usually runs 2-4% below the final pay rate, to get your monthly retired pay estimate.
COLA: same for both systems
Both Legacy and BRS retirees receive full CPI-W cost-of-living adjustments each year. There is no COLA difference between the two systems. The "diet COLA" (CPI minus 1%) was a feature of the now-discontinued Redux retirement system, not BRS.
The full COLA is one of the most valuable features of military retirement. A retiree receiving $3,000/month who experiences average 2.5% COLA annually will see that amount grow to approximately $4,200/month in 10 years and $5,800/month in 20 years in nominal terms -- maintaining real purchasing power against inflation. This COLA protection applies equally to Legacy and BRS retired pay.
VA disability and concurrent receipt
If you have a VA disability rating of 50% or higher, you can receive both military retirement pay and VA disability compensation under Concurrent Retirement and Disability Pay (CRDP). The two payments no longer offset each other. CRDP applies to both Legacy and BRS retirees.
Combat-related disabilities may qualify for Combat-Related Special Compensation (CRSC), which can be more beneficial for retirees with ratings below 50% in certain situations. The military calculator at PensionMath and the TSP projection tool at the TSP calculator can help you model these scenarios.
The legacy versus BRS calculator: what the tool shows
The military retirement calculator at the military retirement calculator is designed to compare total lifetime income under the legacy High-3 retirement system and the Blended Retirement System (BRS) for servicemembers who had a choice between the two. It takes three core inputs: years of service at separation, average base pay over the final 36 months (High-3), and for BRS participants, the estimated TSP balance at separation. The output is a side-by-side lifetime income comparison showing pension income, TSP income at a 4% withdrawal rate, and the combined total for each system at different ages of death.
The legacy system's higher pension percentage (2.5% per year versus 2.0% under BRS) produces more monthly income from the pension alone for every year of service. But the BRS TSP match adds wealth that the legacy system lacks. The calculator quantifies the exact crossover point where BRS's total income -- pension plus TSP -- equals or exceeds the legacy system's pension-only income, based on your specific service history and TSP contribution behavior.
For servicemembers who maximized the DoD match (contributing at least 5% of base pay to capture the full 4% government match), BRS typically outperforms the legacy system in total lifetime wealth for separations below 25 years and approaches parity for 20 to 24 year careers. For servicemembers who contributed minimally to the TSP, BRS consistently underperforms the legacy system on total income because the TSP advantage is not realized. The calculator makes this contribution-dependency explicit.
The break-even between legacy and BRS: running the numbers
The break-even in the legacy versus BRS comparison has two dimensions: the break-even age (at what age does one system's cumulative income exceed the other's) and the break-even contribution rate (at what TSP contribution rate does BRS's total income match legacy's pension-only income).
For a servicemember who separated at exactly 20 years with a High-3 of $80,000: under legacy, the monthly pension is 50% x $80,000 = $40,000/year ($3,333/month). Under BRS, the pension is 40% x $80,000 = $32,000/year ($2,667/month) -- a $666/month difference. The BRS TSP at 20 years with consistent 5% own contribution plus 4% DoD match (9% total) on an average base pay of $72,000 and 6% annual return produces approximately $270,000 at separation. At a 4% withdrawal rate, this generates $10,800/year ($900/month). BRS total: $2,667 + $900 = $3,567/month -- $234/month more than legacy's $3,333/month. In this scenario, BRS wins for a high-contribution servicemember.
The crossover changes dramatically for lower contributors. A servicemember who contributed only 1% of base pay per year to the TSP (capturing only a fraction of the government match) leaves the DoD match on the table and accumulates a much smaller TSP. At 1% own contribution, the BRS TSP at 20 years might total $60,000 -- generating only $2,400/year ($200/month) at 4% withdrawal. BRS total: $2,667 + $200 = $2,867/month versus legacy's $3,333/month. Legacy wins by $466/month for life. The contribution rate is the single variable that most determines which system produces more total lifetime income.
Continuation pay: the BRS bonus and how to model it
BRS's Continuation Pay (CP) is a one-time cash bonus offered between years 8 and 12 of service in exchange for a commitment to serve additional years (the minimum is 3 years for active duty). The amount is at least 2.5 months of basic pay for active duty, but services set their own multipliers based on manning needs. High-demand specialties (pilots, special operations, cyber) have historically received multipliers of 6 to 13 months of basic pay.
Continuation Pay is included in the military retirement calculator's BRS analysis because it is a component of the total BRS financial package. A $30,000 CP payment invested in the TSP at the time of receipt grows significantly by separation. $30,000 invested at 6% annually for 8 years (received at year 10, separating at year 20) becomes approximately $47,800 at separation -- adding another $1,912/year at a 4% withdrawal rate to BRS's total income picture.
Servicemembers who committed to CP but are now reconsidering separation must account for the repayment obligation. CP agreements require repayment on a pro-rated basis if the service commitment is not met. A servicemember who accepted $30,000 for a 3-year commitment and separates 18 months into the commitment owes back 50% of the CP received. Model the potential repayment in any early separation scenario where CP was accepted within the past 3 years.
TSP fund allocation for military members: what the calculator assumes
The military retirement calculator uses a 6% annual return assumption for the TSP portfolio, which is a reasonable long-term expectation for a diversified equity-weighted allocation. The TSP's C Fund (S&P 500 index) has historically returned approximately 10% annually over 30-year periods, and the L Fund for your target retirement year provides automatic allocation adjustment. Active duty servicemembers who are 20 to 30 years from separation have time to absorb significant market volatility in an equity-heavy allocation.
Most financial planners recommend that servicemembers contribute to the Roth TSP during deployments to combat zones, when combat pay is excluded from federal income tax. Contributing to the Roth TSP when income is tax-free means the contribution goes in untaxed (as usual for Roth) but the underlying income was also untaxed -- effectively avoiding all federal income tax on that money forever. The calculator's assumptions do not separate Roth from traditional TSP, but the tax advantage of combat-zone Roth contributions compounds substantially over a 20-year military career.
Reserve and Guard: different inputs for non-regular retirement
Reserve Component members who are deciding between legacy and BRS use the same high-level framework but different inputs. Non-regular retirement pay begins at age 60 (or earlier with qualifying active service), so the pension income stream starts later and runs for fewer years than active duty retirement at age 38 to 45. This later start date reduces the present value advantage of the higher legacy pension and strengthens the argument for BRS's TSP accumulation, which is available at separation regardless of age.
A Reserve member who separates at 20 years of qualifying service with 3,000 points and a High-3 of $7,500/month has a non-regular pension of approximately (3,000/360) x 2.5% x $7,500 = $1,563/month at age 60. Under BRS, the pension factor is 2.0% instead of 2.5%, producing $1,250/month. The $313/month difference in pension income, starting at 60, produces less lifetime total income than an active duty career differential because the payment period is shorter. Meanwhile, the TSP accumulated over the reserve career is available at any age for penalty-free distributions after 59.5, independent of when the pension starts. For Reserve members, the BRS TSP advantage is relatively larger compared to active duty because the legacy pension advantage (higher monthly payment) has fewer years to compound.
Survivor Benefit Plan: the decision that outlasts your retirement
Every military retiree with a spouse or dependent makes a Survivor Benefit Plan (SBP) election at retirement. SBP provides a monthly annuity to your surviving spouse equal to 55% of your covered base amount if you die first. The cost is 6.5% of the covered base amount per month. For a retiree with $3,000/month in retired pay who elects full SBP coverage, the monthly premium is $195, and the surviving spouse would receive $1,650/month ($3,000 x 0.55) for life.
SBP coverage is inflation-adjusted via COLA, matching the annual COLA on the underlying retired pay. A surviving spouse who receives SBP in 2026 and lives to 2046 continues receiving the same real purchasing power, because both the benefit and the premium rise with inflation. This is a meaningful advantage over private life insurance, which has a fixed death benefit that erodes in real value over time.
The critical SBP decision at retirement is whether to elect full coverage, partial coverage, or no coverage (with required spousal consent). For BRS retirees, SBP covers the monthly retirement pay component -- the TSP balance is a separate asset that passes to named beneficiaries outside of SBP. The TSP balance does not need SBP protection because it already transfers as an account balance. Legacy retirees have the same SBP structure, but because their entire retirement benefit is in the monthly pension, SBP protection is more important as a percentage of total retirement income.
Military retirees who also receive VA disability compensation must understand the interaction between VA compensation, SBP, and TRICARE. SBP is calculated on retired pay, which can be offset by VA disability compensation under the old concurrent receipt rules (now largely superseded by CRDP and CRSC). Verify your specific concurrent receipt eligibility with the relevant service branch's finance office before making the SBP election, since the covered base amount determines both the premium and the survivor benefit.
VA disability and military retirement: CRDP and CRSC
Military retirees with service-connected disabilities rated at 50% or higher by the VA generally qualify for Concurrent Retirement and Disability Pay (CRDP), which restores retired pay that was previously offset by VA disability compensation. Under pre-CRDP rules, retirees had to waive one dollar of retired pay for every dollar of VA disability compensation received -- an effective tax on disabled veterans who had earned both benefits.
CRDP is taxable as retired pay. Combat-Related Special Compensation (CRSC) is an alternative for retirees whose disabilities are combat-related -- CRSC payments are tax-free and may be larger than CRDP depending on the specific disability rating and base retired pay. A retiree can only receive one: CRDP or CRSC, not both. The military calculator at the military retirement calculator does not currently model VA disability interactions (since VA disability is separate from the pension system), but understanding whether your retirement scenario involves concurrent receipt directly affects the net retirement income the calculator should compare against.
BRS retirees with VA disability face the same CRDP/CRSC framework as legacy retirees, but because BRS retired pay is lower (20% of final pay at 20 years versus 50% under legacy), the absolute dollar impact of VA disability offset -- and the benefit of CRDP restoration -- is also lower. A BRS retiree with a 70% VA disability rating receives more of their total retirement income from the VA than a legacy retiree would, which changes the optimization between CRDP and CRSC.
TRICARE in retirement: the benefit the calculator does not price
Military retirement comes with TRICARE coverage for the retiree and covered family members. TRICARE Prime for retirees under 65 has annual enrollment fees and copays that are materially lower than private health insurance premiums. The 2026 TRICARE Prime annual enrollment fee for a retiree (non-active duty) and family is approximately $660/year for the family enrollment -- roughly $55/month. Comparable private health insurance for a family often runs $1,500 to $2,500/month or more.
The TRICARE benefit represents $1,000 to $2,500/month in implicit value that does not appear in any pension calculator comparison. A separating service member choosing between staying to 20 years for retirement versus leaving at 15 years for a civilian career with higher base salary must include TRICARE in the comparison, because losing military retirement means losing TRICARE eligibility (absent combat-related disability). On a 25-year retirement horizon from age 42 to 67, the TRICARE premium savings alone could total $300,000 to $700,000 in nominal dollars -- dwarfing the difference between BRS and legacy for many service members.
Using the military calculator: a complete decision framework
The military retirement calculator at the military retirement calculator handles the core BRS versus legacy comparison for active duty members still covered under the OPT-IN window (for those who had the choice) and the current structure for post-2018 accessions (mandatory BRS). For those already on legacy who are past the opt-in window, the calculator serves a different function: projecting final legacy pay at various service lengths and comparing it to civilian alternatives.
For a complete military retirement analysis, run the calculator with three scenarios: first, retirement at exactly 20 years of service (the earliest qualifying point); second, retirement at the specific service length you are considering; third, retirement at a longer service point that would increase the retirement multiplier or final pay. Compare the monthly income difference between the scenarios to the income you would earn in the additional service years, accounting for promotion probability and bonus eligibility. The break-even on additional service is often shorter than service members expect, particularly in the E-7 to E-9 and O-4 to O-6 ranges where pay increases are significant.
Disability retirement: a separate path from length-of-service retirement
Service members who are medically separated before completing 20 years of service may qualify for disability retirement if their disability rating is 30% or higher. Disability retirement provides a monthly benefit that is the higher of two calculations: the disability percentage times final basic pay, or years of service times 2.5% times final basic pay. A service member with a 60% disability rating and 14 years of service would compare 60% of final basic pay versus 35% (14 x 2.5%) -- the disability percentage wins, providing 60% of final pay.
Disability retirement is taxable for combat-related disabilities only if the member elects CRSC. Otherwise, disability retirement pay is taxable at ordinary income rates. The military retirement calculator at the military retirement calculator does not model disability retirement, since disability rating determinations are external to the retirement pay formula. Service members facing a medical separation should work with a benefits counselor or JAG officer to model the disability retirement income alongside VA disability compensation for a complete picture.
The 40-year retirement multiplier cap and high-year tenure
Under the legacy retirement system, the retirement multiplier caps at 100% of final pay at 40 years of service (2.5% x 40 = 100%). Few service members reach 40 years, but high-year tenure policies and promotion selection boards create practical retirement windows at specific service lengths. Officers who are twice-passed-over for promotion face mandatory separation; enlisted members face high-year tenure limits by rank. Understanding the mandatory separation timeline for your rank and component is an input to the retirement calculator that determines not just when you can retire but when you must.
For BRS members with 40 years of service (extremely rare, limited to senior general and flag officers), the multiplier is 40% of final pay (1% x 40) plus TSP -- substantially lower than the legacy cap of 100%. The BRS multiplier disadvantage is most pronounced at very high service lengths, but this affects an extremely small population. For the vast majority of service members who retire between 20 and 30 years, the BRS versus legacy comparison centers on the break-even analysis the calculator provides, not the multiplier cap.
Inflation and military retired pay: the COLA protection advantage
Military retired pay under both legacy and BRS receives annual COLA adjustments tied to the CPI-W. In 2026, the COLA adjustment was 2.5%, continuing a series of post-pandemic adjustments that provided meaningful purchasing power protection after the 2022-2023 inflation spike. Over a 30-year retirement from age 42 to 72, COLA compounding on military retired pay adds substantially to total lifetime income compared to a fixed corporate pension with no COLA.
A legacy retiree receiving $3,500/month in 2026 who experiences average 2.5% COLA annually will receive approximately $4,900/month in 2036 and $6,900/month in 2046 in nominal terms. The real purchasing power stays flat -- that is the point of COLA -- but the nominal income growth means the retired pay maintains its practical value relative to rising costs. This COLA protection is not reflected in static pension comparisons and is one of the most underappreciated advantages of military retirement over private sector alternatives that offer fixed defined benefit payments.
BRS members receive the same COLA protection on their retirement pay as legacy members. The 1% multiplier difference between BRS and legacy reduces the base on which COLA compounds, but the COLA mechanism itself is identical. Over a 30-year retirement, both systems provide real purchasing power preservation. The TSP balance in a BRS retirement grows tax-deferred and can serve as a supplement during years when COLA adjustments fall short of actual personal spending inflation -- healthcare costs in particular tend to rise faster than CPI-W for older retirees. Coordinating the fixed COLA-adjusted pension with the flexible TSP withdrawal is the income optimization challenge that defines BRS retirement planning. A TSP withdrawal strategy that begins modestly -- covering discretionary spending gaps -- and scales up as Social Security is deferred to 70 is the most efficient sequence for BRS retirees who want to maximize lifetime income across all three sources. Model this sequence in the military calculator at the military retirement calculator alongside the Social Security deferral comparison to see the full income picture across 20 to 30 years of retirement. The military pension, TSP, and Social Security form a three-legged income structure that no private sector compensation package replicates. Understanding how each leg interacts -- the fixed COLA-adjusted pension, the invested and flexible TSP, and the deferred but growing Social Security benefit -- is the core work of military retirement planning.