Once you are ready to leave the military it’s important you know how soon your retiremement pay will begin.
While military retirement pay starts as soon as the day you retire, it will take 30-45 days for new retirees payments to process. You will recieve a payment on the first of each month, excpect when the first of the month lands on a holiday/weekend. Understanding the time it takes for pay processing will help prevent a reliance on money that’s payment will be delayed.
How Early Does Military Retirement Pay Start?
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How Soon After Retirement Will Payments Begin?
Unlike many retirement plans, you are eligible to begin recieving pay from the very first day you retire. Even if you joined the service at 18 years old, and served for 20 years, you would still be eligible for retirement pay as early as 38 years old. Even if you didn’t do quite enough time in the military to live off of, retirement pay can still be a serious pad to your salary should you choose to work outside of the military.
The type of retirement pay/annuity you recieve determines how long it will take for payment processing:
|Retirement / Annuity Type||Typical Processing Time Frame||Additional Notes|
|New Retirements||30-45 days||Incorrect DD form 2656 can slow process down|
|Retired Pay Account Changes||3-7 days||While myPay changes will update in 3-7 business days, changes may not change until next payday|
|Combat-Related Special Compensation (CRSC)||30-45 days||Timeframe begins after approval letter from branch. If research is required these cases can take longer|
|Condelence Letter||30 days||Timeframe begins after reporting death of retiree to DFAS|
|Survivor Benefit Plan||30 days||Complex cases may take 45+ days|
|Arrears of Pay for Decased Retiree||30-45 days||Timeframe begins after receiving SF 1174 and supporting documentation|
For the vast majority of servicemembers, you can expect around 30-45 days after you retire to begin seeing retirement pay. While you will be backdated any missing payments, it’s good to ensure you have the spare cash to hold you over until retirement payments begin.
2021 Military Retiree/Annuitant Pay Date Schedule
For military retirees, you will be paid on the first of every month, excpect for holidays/weekends where you will be paid prior to the weekend/holiday landing on the 1st of that month.
For individuals recieving annuties such as surviving spouses and other family members, you will be paid on the first of every month, expect for holidays/weekends where you will be paid after the weekend/holiday landing on the 1st of that month.
|Entitlement Month||Retiree Payment Date||Annuitant Payment Date|
|January 2021||Febuary 1st, 2021 (Monday)||Febuary 1st, 2021 (Monday)|
|Febuarary 2021||March 1st, 2021 (Monday)||March 1st, 2021 (Monday)|
|March 2021||April 1st, 2021 (Thursday)||April 1st, 2021 (Thursday)|
|April 2021||April 30th, 2021 (Friday)||May 3rd, 2021 (Monday)|
|May 2021||June 1st, 2021 (Tuesday)||June 1st, 2021 (Tuesday)|
|June 2021||July 1st, 2021 (Thursday)||July 1st, 2021 (Thursday)|
|July 2021||July 30th, 2021 (Friday)||August 2nd, 2021 (Monday)|
|August 2021||September 1st, 2021 (Wednesday)||September 1st, 2021 (Wednesday)|
|September 2021||October 1st, 2021 (Friday)||October 1st, 2021 (Friday)|
|October 2021||Novemeber 1st, 2021 (Monday)||Novemeber 1st, 2021 (Monday)|
|November 2021||December 1st, 2021 (Wednesday)||December 1st, 2021 (Wednesday)|
|December 2021||December 30th, 2021 (Thursday)||January 30th, 2021 (Monday)|
You should be aware that certain military banks such as Navy Federal Credit Union (NFCU), and USAA can offer earlier payment by 2-3 days, should you desire that benefit.
Military Pay Changes in Retirement
Once you retire, your retirement income will be based off strictly your base pay. This means that many things that were inluded in your active-duty pay; Basic Allowance for Housing (BAH), Basic Allowance for Subsistence (BAS), Hazard Pay, and more, will no longer be factored in. However, this is not the only information regarding your retirement pay you should be aware of.
5 Things You Should Know About Retirement Pay
1.) Pay is Monthly
While the majority of military branches have two pay periods (first of the month & mid-month), retirement pay will be lumped sum onto the first of every month.
So make sure you don’t manage to blow all of your money in the first half of the month!
2.) There Will Likely Be Errors
As mentioned in the beginning of this post, it can take up to 30-45 days before you actually see your money. Then again, this shouldn’t exactly come as a shock to anyone. If you have spent 20+ years in the military, you understand that the paperwork and beauracacy can slow proccesses down.
Just ensure that you have enough liquid cash reserves to be able to withstand the month or two wait before you begin seeing your paychecks again.
3.) Your Retirement Pay Is Taxed
While your retirement income will be subject to federal income tax, you will be exempt from paying into Social Security/Medicare since it is not considered earned income.
You may choose, however, to retire to a state with no-income tax. If we take a look at a map of where all current DOD retirees (Army, Navy, Air Force, USMC, National Guard) choose to live, it’s is obvious plenty of servicemembers opted for states with no income tax:
If you want to learn more about the best states for military retirees, checkout our blogpost here!
4.) You Should Change Your Withholding
This tip is specifically aimed at retirees who choose to pursue another career after leaving the military.
More often than not, you will face higher tax bills than expected once retired from the service. Since the Defense Finance and Accounting Service (DFAS) withholds income tax based on your W-4 Employee’s Withholding Allowance Certificate, unless you manually update your tax withholding, they will withhold your taxes at the same rate.
Since they are unable to predict whether or not you got a job after retirement, your withholding will be the wrong amount, and you will be left with a larger tax bill in April. It’s best if you can be proactive by changing your withholding to avoid any unwanted surprises come tax season.
5.) Sold Back Leave Payments Get Paid Out Whenever
Many servicemembers will be leaving the military with banked leave. If you are in this boat, I would reccommend using the leave rather than selling it. If you opt to use the leave rather than sell it, that means you will still qualify for active-duty healthcare benefits, while also earning income while looking for your new job (or earn two paychecks at once!)
However, if you do opt to sell back your leave, the amount of time it takes for the money to enter your bank account can vary. It could be months before you actually see any of your money, so make sure not to budget this money into your post retirement bills.
Tools for a Successful Retirement
If you want more info on how to ensure a successful retirement from the military, be sure to check out other programs such as the Thrift Savings Plan (TSP) / Savings Deposit Program (SDP) that make the military a financially lucrative career.