Retired Pay and Survivor Benefit Plan (SBP)

Start Here If You Are New to Active Duty Retired Pay

Active duty retired pay is calculated under one of two systems. HIGH-3 (most current Marines, applies to those who entered service before 1 January 2018 and did not opt into BRS) uses the average of the highest 36 months of basic pay. BLENDED RETIREMENT SYSTEM (BRS) applies to those who entered service after 1 January 2018 OR opted in during the 2018 transition window. BRS includes lower retirement pay multiplier (2.0% vs High-3 2.5%) PLUS TSP government contributions PLUS Continuation Pay at midcareer. Both systems use years of service multiplier × average basic pay. The SURVIVOR BENEFIT PLAN (SBP) allows the retiree to provide up to 55% of retired pay as a monthly annuity to a beneficiary. SBP elections must be made before retirement and are largely irrevocable. Cost-of-Living Adjustments (COLA) increase retired pay annually. Tax considerations vary by state of residence (some states tax military retired pay, others do not). Per DoD FMR Volume 7BDoD FMR Volume 7B.

This page walks you through retired pay and SBP from your seat as a Marine retiring or already retired. By the end you will know.

• High-3 retirement system formula and eligibility
• Blended Retirement System (BRS) formula and eligibility
• Survivor Benefit Plan (SBP) framework and elections
• SBP beneficiary options
• SBP costs and premiums
• Cost-of-Living Adjustments (COLA)
• Tax considerations
• Cross-reference to Reserve Component Survivor Benefit Plan (RCSBP) for Reserve

Every fact on this page comes from DoD FMR Volume 7BDoD FMR Volume 7B, MCO 1900.16MCO 1900.16, 10 U.S.C. 140110 U.S.C. 1401-1414 (retired pay), 10 U.S.C. 144710 U.S.C. 1447-1455 (SBP), DFAS published guidance, and the DoD Office of the Actuary.

High-3 Retirement System

The most common retirement pay system for current retirees.

Eligibility for High-3

• Service members who entered active duty before 1 January 2018, AND.
• Did NOT opt into BRS during the 2018 transition window.

High-3 Formula

Retired Pay = Average of Highest 36 Months of Basic Pay × 2.5% × Years of Service.

Example

Marine retires after 20 years of service. Average of highest 36 months of basic pay is $7,000.

• $7,000 × 2.5% × 20 = $3,500/month.

What Counts as "Highest 36 Months"

Typically the most recent 36 months for active duty retirees (assuming the Marine retires at their highest grade with TIG met).

Maximum Multiplier

Per DoD FMR, the multiplier caps at 75% (achieved at 30 years of service for High-3).

Blended Retirement System (BRS)

The newer retirement pay system.

Eligibility for BRS

• Service members who entered active duty on or after 1 January 2018, OR.
• Service members who entered before 1 January 2018 AND opted into BRS during the 2018 transition window.

BRS Formula

Retired Pay = Average of Highest 36 Months of Basic Pay × 2.0% × Years of Service.

Why Lower Multiplier

BRS has a lower retirement pay multiplier because it includes additional benefits NOT available in High-3.

BRS Additional Benefits

TSP Government Contributions

• Government 1% automatic TSP contribution.
• Government 4% match (up to 4% match cap).
• Vesting at 25 months of TSP government 1% contribution.

Continuation Pay

A midcareer bonus payable at 8-12 years of service. Multiplier of 2.5x to 13x monthly basic pay.

The Continuation Pay (CP) leaf in the Pay and Entitlements parent group covers Continuation Pay framework.

BRS vs High-3 Trade-Off

• High-3. Higher retirement pay multiplier (2.5%) but no government TSP contributions.
• BRS. Lower retirement pay multiplier (2.0%) but government TSP contributions (5% total) and Continuation Pay.

Cross-Reference

The TSP and Savings leaf in the Pay and Entitlements parent group covers TSP framework.

Survivor Benefit Plan (SBP)

SBP allows the retiree to provide up to 55% of retired pay as a monthly annuity to a beneficiary after the retiree's death.

What SBP Provides

• Monthly annuity (up to 55% of retired pay).
• Adjusted with COLA.
• Pays for the beneficiary's life (with specific exceptions).

Why SBP Exists

Without SBP, the retired pay stops at the retiree's death. SBP provides ongoing financial support for the surviving spouse or other beneficiary.

SBP Election Timing

SBP elections must be made BEFORE retirement. Married Marines have specific rules.

Spousal Concurrence

Marines who are married must have spousal concurrence to elect anything LESS than full SBP coverage. This protects the spouse's interest in the retirement.

Auto-Enrollment

If a Marine is married and does not affirmatively elect otherwise, auto-enrollment in full SBP coverage occurs.

SBP Beneficiary Options

Spouse Only

Spouse receives the annuity for life unless remarried before age 55.

Spouse and Children

Spouse is primary beneficiary. If spouse dies or becomes ineligible, annuity divides equally among eligible children.

Children Only

Annuity divides equally among children until age 18 (or 22 if full-time student and unmarried). Disabled children may receive lifetime annuity.

Insurable Interest

Available to unmarried Marines without children, OR to those with one child only. Allows election of an insurable-interest beneficiary (relative or person with financial interest).

Former Spouse and Children

Per court order or voluntary election. Specific framework per DoD FMR Volume 7BDoD FMR Volume 7B.

SBP Costs

SBP premiums are deducted from retired pay.

• Standard SBP premium is approximately 6.5% of the elected base amount.
• Reduced rates for some specific elections.
• Beneficiary type affects premium.

Once Cost Begins

SBP premium deduction begins immediately upon retirement.

When SBP Becomes Paid Up

After 360 paid months of premium AND age 70, SBP is "paid up." No more premium deductions but coverage continues.

Comparison with Commercial Insurance

The DoD Office of the Actuary publishes a tool at actuary.defense.gov to compare SBP with commercial life insurance. The comparison should include.

• Cost over time.
• Survivor benefits (annuity vs lump sum).
• COLA adjustment.
• Tax implications.

SBP Cancellation

SBP is largely irrevocable. Limited exceptions.

• Marital status changes (divorce, death of spouse, remarriage).
• 12-month window for changes after a qualifying life event.
• Discontinuation possible within one year after the second year of receiving retired pay (specific framework per recent law changes).

Cost-of-Living Adjustments (COLA)

Retired pay receives annual COLA increases.

What COLA Is

Annual percentage increase to retired pay aligned with the Consumer Price Index (CPI).

Why COLA Matters

Maintains the purchasing power of retired pay over time.

When COLA Applies

Effective each December typically. Reflected in the January retired pay deposit.

COLA on SBP

SBP annuities also receive COLA increases.

Tax Considerations

Federal Tax

Retired pay is federally taxable income. Subject to federal income tax withholding.

State Tax

State tax treatment varies.

States That Do NOT Tax Military Retired Pay

Many states (e.g., Alabama, Arizona, Florida, Texas, Wyoming, etc.) do not tax military retired pay.

States That Tax Military Retired Pay

Some states tax retired pay similar to other income.

Partial Tax Exemptions

Some states partially exempt military retired pay (varying frameworks).

Where to Verify

Coordinate with state tax authority and consider tax planning during the retirement timeline.

Disability Retirement and Tax

Disability retirement pay (PDRL/TDRL with disability rating) may receive specific tax treatment. Coordinate with tax preparer or VA-accredited representative.

DFAS and Retired Pay Administration

How Retired Pay Is Paid

Through DFAS direct deposit to the retiree's bank account.

When the First Retired Pay Arrives

Typically the first month after retirement. The Marine receives a partial check from the effective date until the end of that month, then full monthly checks.

Where to Verify

DFAS at https://www.dfas.mil/. Phone for Marine retired pay 1-800-321-1080.

MyPay for Retirees

Retirees access their pay records through MyPay similar to active duty.

Address Updates

Retirees must keep DFAS current on address, banking, and contact information. Failure to update can delay or stop retired pay.

Cross-Reference to RCSBP

Reserve Marines have a different SBP framework called RCSBP (Reserve Component Survivor Benefit Plan).

Key Differences

• RCSBP applies during the period between 20-Year Letter (NOE) and reaching age 60.
• RCSBP has Options A (Decline), B (Deferred), C (Immediate).
• Premium structure differs.

The Reserve Component Survivor Benefit Plan (RCSBP) leaf covers RCSBP in detail.

Common Retired Pay Scenarios

Scenario 1. SSgt Retires After 20 Years (High-3)

Marine retires as SSgt after 20 years. Average of highest 36 months basic pay $4,800.

• High-3 calculation. $4,800 × 2.5% × 20 = $2,400/month.

Scenario 2. GySgt Retires After 22 Years (High-3)

GySgt with average of highest 36 months $5,500.

• High-3 calculation. $5,500 × 2.5% × 22 = $3,025/month.

Scenario 3. Marine Under BRS Retires After 20 Years

Marine under BRS retires after 20 years. Average of highest 36 months $5,000.

• BRS calculation. $5,000 × 2.0% × 20 = $2,000/month.
• Plus the Marine's TSP balance accumulated during service with government 5% contributions.

Scenario 4. Married Marine Auto-Enrolled in SBP

Married Marine retires. Does not affirmatively elect anything different.

• Result. Auto-enrolled in full SBP coverage.
• Premium. Standard SBP premium deducted from retired pay.
• Beneficiary. Spouse.

Scenario 5. Marine Considers SBP vs Commercial Insurance

Marine reviews SBP cost vs commercial term life insurance.

• Use DoD actuary tool. Compare costs and benefits over time.
• Decision factors. Spouse's age, health, retiree's age, financial situation.
• Result. Marine elects SBP or alternative based on analysis.

Common Mistakes

Mistake 1. Not Understanding Which Retirement System Applies

Marines who entered before 2018 may have stayed in High-3 or opted into BRS. Verify which system applies to your situation.

Mistake 2. Late SBP Decision

SBP elections are required before retirement. Late elections may default to auto-enrollment.

Mistake 3. Not Comparing SBP With Commercial Alternatives

The SBP decision is significant. Use the DoD actuary tool to compare.

Mistake 4. Spousal Concurrence Issues

Marines must have spousal concurrence for less than full SBP. Coordinate early.

Mistake 5. Not Understanding COLA

COLA increases retired pay annually. Plan for annual changes.

Mistake 6. State Tax Surprise

Some states tax military retired pay. Verify before relocating in retirement.

Common Questions Marines Ask

What is High-3?

The retirement system using the average of highest 36 months of basic pay × 2.5% × years of service. Most common for current retirees.

What is BRS?

The Blended Retirement System. Multiplier of 2.0% × years of service. Includes TSP government contributions and Continuation Pay. For Marines who entered after 1 January 2018 or opted in.

How is retired pay calculated?

Average of highest 36 months × multiplier × years of service. High-3 multiplier 2.5%. BRS multiplier 2.0%.

What is SBP?

Survivor Benefit Plan. Allows retiree to provide up to 55% of retired pay as monthly annuity to a beneficiary.

What are the SBP beneficiary options?

Spouse Only, Spouse and Children, Children Only, Insurable Interest, Former Spouse and Children.

What does SBP cost?

Premium approximately 6.5% of elected base amount. Beneficiary type affects rate.

When does SBP become paid up?

After 360 paid months of premium AND age 70. Coverage continues without further deductions.

Can I cancel SBP?

Largely irrevocable. Limited exceptions for marital status changes (12-month window) and recent law changes allowing discontinuation within one year after second year of receiving retired pay.

What if I am married and do not elect SBP?

Auto-enrollment in full coverage applies. Spousal concurrence required for less than full coverage.

How does COLA work?

Annual percentage increase to retired pay aligned with CPI. Effective each December typically.

Is retired pay taxable?

Yes federally. State tax treatment varies. Some states do not tax military retired pay.

How do I get my retired pay?

Through DFAS direct deposit. First month is partial check. Subsequent months are full.

Where can I compare SBP with commercial insurance?

DoD Office of the Actuary at actuary.defense.gov.

How does Reserve retirement pay differ?

Reserve. Pay begins at age 60 (with NDAA reductions). Retirement points formula. The Reserve Retirement leaf covers.

How does RCSBP differ from SBP?

RCSBP applies between 20-Year Letter and age 60. Different election framework. The RCSBP leaf covers.

Where to Go for Help

Routing by Issue

• Active duty retired pay calculation. DFAS at https://www.dfas.mil/ or 1-800-321-1080.
• BRS framework. The TSP and Savings leaf in Pay and Entitlements.
• SBP elections. Coordinate with installation Family Programs and the Marine Corps Personal Affairs.
• SBP comparison with commercial insurance. DoD Office of the Actuary at actuary.defense.gov.
• Cost-of-Living Adjustments. DFAS announcements.
• State tax for retirees. State tax authority.
• MMSR-6 for retired services. (703) 784-9311 or smb_manpower_mmsr6@usmc.mil.

Where to Go Next on This Site

• Separations and Retirement landing page lists all topics.
• Separations and Retirement Overview and Authorities covers the framework.
• Retirement Types and Eligibility covers retirement framework.
• Retirement Timeline covers planning phases including SBP decision points.
• Reserve Component Survivor Benefit Plan (RCSBP) covers Reserve framework.
• Reserve Retirement covers Reserve qualifying years.
• TSP and Savings in Pay and Entitlements covers BRS TSP framework.
• Continuation Pay (CP) in Pay and Entitlements covers BRS Continuation Pay.
• Death Payments and Survivor Benefits in Pay and Entitlements covers death gratuity and DIC.
• Federal Tax Withholding in Pay and Entitlements covers tax framework.

Related Roles

• Leaders coach Marines on retired pay calculation and SBP decision.
• Admin at S-1 supports SBP election submission.
• Commanders ensure retiring Marines have access to retired pay information and SBP decision support.

Active duty retired pay calculation. High-3 (2.5% × years of service × average highest 36 months basic pay) for most current retirees. BRS (2.0% × years of service × average highest 36 months) plus TSP government contributions and Continuation Pay for those entering after 1 January 2018 or opted in. SBP allows up to 55% of retired pay as monthly annuity to beneficiary. SBP elections before retirement. Largely irrevocable. Auto-enrollment for married Marines unless affirmatively elect otherwise. Spousal concurrence for less than full coverage. COLA increases annually. State tax treatment varies. Cross-reference to RCSBP for Reserve framework. Per DoD FMR Volume 7BDoD FMR Volume 7B.