NORFOLK, Va. - What keeps you motivated to serve? Is it the camaraderie or the nature of the work? Is it devotion to country or the satisfaction of being part of something bigger than yourself? Could it be at least partly the money, whether the drill or AT pay, or the GI Bill benefits or the future retirement value? For whatever reasons you serve, at some point your time in service will come to an end. The main question is whether or not you will be ready for retirement — but you probably have more than one question about how to get to that end point in your Navy career.
Let’s start by checking in together about your basic understanding. Do you know which retirement “defined benefit plan” you will be eligible to retire under? Do you know how to interpret your Statement of Service and verify how many Qualifying Years you have? What kinds of things should you consider along the way, as you work toward deciding when to retire? How do you calculate or estimate the value of your future retirement? When you will be eligible to receive retirement pay? What forms, paperwork or electronic submissions are required to retire? Let’s work through these questions together, so you can be best prepared to navigate this important career life event.
An important concept to internalize before we get into the details is that most Reserve Sailors will essentially need to retire TWICE — once to Retired Without Pay status (also known as the Gray Area), and then again to Retired With Pay status — at a time unique to you, but nominally at age 60. Both retirements involve administrative steps either submitted electronically or through manual forms. Retiring with Pay also includes taking action with the Defense Finance and Accounting Service (DFAS) to fully establish your Retiree Pay Account. You’ll want to mark your calendar and set aside ample time to tend to these important processes.
Reserve Retirement basics
Generally, a Reservist is eligible for Non-Regular Retirement once they have 20 Qualifying Years of service. Also known as a Good Year, a member accrues a Qualifying Year after they have earned a minimum of 50 retirement points in their own Anniversary Year. This is the Sailor’s individual Reserve year, which typically begins on the anniversary of their first day in the Reserve or date commissioned and ends the day prior to the anniversary. This date can change throughout a career depending on breaks in service or other factors. Knowing your Anniversary Year can help you maximize your future retirement value.
The 50 retirement points (or more) accrued over each year are from the following sources:
• You receive one point for each drill period performed (e.g.,Inactive Duty for Training (IDT)); one point for each day of active service (e.g., Annual Training (AT), mobilization); and one for each day of funeral honors. You may also earn points from approved correspondence courses (See page 33).
• For each year you are affiliated with the Navy Reserve you will automatically receive 15 points for Reserve service — or as pro-rated for partial years.
The annual maximum number of total points is equal to the number of days in the Anniversary Year (365 or 366), while the maximum number of Inactive Points is capped at 130.
It is possible to earn a Good Year while simultaneously having unsatisfactory participation. In other words, the Sailor may have over 50 retirement points in an Anniversary Year, qualifying the member for a Good Year, but have unsatisfactory participation from not completing an AT (and not having an approved AT waiver), or having more than 9 unexcused drill period absences. Unsatisfactory participation does not cancel out a Good Year, but could lead to an early separation from the Navy Reserve.
Keep an eye on your points
As your years of service close out along the path toward retirement, you should be keeping an eye on your point record. Your annual record of accrued Retirement Points, also known as your Unofficial Statement of Service, is available to you with a CAC login to the Navy Standard Integrated Personnel System (NSIPS) via Employee Self-Service in the Retirements and Separations module. This is the source platform for what you may know as the Annual Statement of Service History (ASOSH), found on BUPERS Online (BOL). If you do not have a CAC, you may request a copy by contacting the My Navy Career Center (MNCC).
Here are a few terms you will need to be familiar with as you decipher your point record.
Total Years of Qualifying Service (TYQS)
- Number of years completed with the minimum number of points to qualify as a satisfactory year toward retirement.
Pay Entry Base Date (PEBD)
- Date that denotes how much of your service is creditable towards longevity for pay purposes. It can be found in field four of your last active duty Leave and Earnings Statement (LES).
Length of Service (LOS)
- Total number of years, months and days a member has been under contract. LOS is used to calculate PEBD and is also the measure of when a Reserve Component Sailor reaches High Year Tenure (HYT).
Years of Commissioned Service
- Total number of years an officer has been commissioned, which is subject to Statutory Limits.
Take time to assess your goals and ensure your career path is taking you where you hope to be when you reach retirement eligibility and beyond. Strategically plan your time in regard to active and inactive points, anniversary and fiscal years.
If you anticipate reaching HYT (Enlisted) or Statutory Limits (Officer) at twenty years of service, you should be especially mindful of your Qualifying Years compared to Years of Service. You should start talking with your career counselor now about the best time to submit your retirement request.
Frequent review of your Statement of Service is critical. A discrepancy in your point record can be a meaningful difference in Qualifying Years and/or the dollar value of your future retirement. The earlier discrepancies can be identified and corrected, the better. Looking ahead, some discrepancies can still be corrected while in the Gray Area, but this can be problematic for members who are no longer focused on drilling, have competing priorities in their daily retired life, and no longer have CAC-enabled access to systems like NSIPS and BOL or support from a NOSC or Program Office to readily verify that the point record updates were made. Get your corrections taken care of now!
While still a member of the Reserve Component, you can take your supporting documentation to your NOSC or Program Office for assistance in correcting any discrepancies. If unable to correct an issue, contact the My Navy Career Center to create a service request in order to begin the discrepancy resolution process. Again, you will need to be able to provide supporting documentation to MNCC.
MNCC can be reached by phone at 1-833-330-MNCC or by email at email@example.com
NOTICE OF ELIGIBILITY
After you achieve 20 qualifying years of service, and within 12 months, Navy Personnel Command (NPC) PERS-912 will send a Notice of Eligibility letter to you at the mailing address they have on record. If you are getting close to that time, it is a good idea to mark your calendar for the earliest date you might receive the letter. There could be a delay in receiving it if you are on active duty orders during the time your 20th qualifying year is posted to your statement of service. The delay is due to the time needed to complete the transfer from the Active Component back into the Reserve Component, and the Retirement Points from that 20th Qualifying Year to post to your Statement of Service (i.g., your point record).
You’ll want to be on the lookout in your regular postal mail, at the address on file with PERS — check both DEERS and NSIPS for your correct mailing address. You’ll also want to plan time for you and your spouse to complete and return this important future decision paperwork within the 90-day time frame.
A common misconception is that this letter notifies you of your achieving 20 qualifying years and being eligible to retire. Although that is true, it is more importantly your notice that a limited time frame has begun — a time frame that has important future financial implications. From receipt of the NOE, you have 90 days to complete and return your Reserve Component Survivor Benefit Plan Election Certificate (DD Form 2656-5). You should discuss your Survivor Benefit Plan election options with your spouse and ideally meet with your financial planner. This also presents a timely opportunity to look over other financial planning aspects of your future retirement.
The Reserve Component Survivor Benefit Plan (RC-SBP) is an annuity which would provide a monthly payment should you as the member pre-decease your eligible beneficiary. The amount of the monthly annuity payment is a percentage of your retired pay. The choices you make as RC-SBP elections incur a premium cost from that future retired pay. If you are electing anything other than the highest benefit option, which typically incurs the highest future premium cost (Option C, the Immediate Annuity, detailed below), your spouse must also sign and date the form, with a notarized witness of that signature.
There are three main options from which to elect.
- Decline to make an annuity election until age 60.
OPTION B (DEFERRED ANNUITY)
- Election to provide an annuity beginning on the 60th anniversary of the member’s birth date if member should die before that date, or on the day after date of death should member die on or after their 60th birthday.
OPTION C (IMMEDIATE ANNUITY)
- Election to provide an immediate annuity beginning on the day the member’s death, whether before or after age 60. RC-SBP defaults to this option for members with eligible dependents at the NOE.
You must submit the RC-SBP Election Certificate to PERS-912, within the 90-day period after being notified of eligibility, as detailed in your NOE letter. If you do not submit the form as required, your election, if any, will be determined by law. Currently, that means that if you have eligible dependents at the time of your NOE, your RC-SBP election will default to the highest level, which implicates the highest future premiums payable from your retirement pay.
It is very important to realize that this election has financial implications, both in terms of the premium taken from the member’s future retired pay, as well as the annuity available to surviving eligible dependents. It is a very personal financial decision. You and your family may have a variety of other financial options available should you die before your eligible beneficiaries, such as other retirement plans or accounts, or even life insurance. But, declining RC-SBP means that your future retired pay would die with you.
The most important takeaway is that this decision is to be made within 90 days of receipt of your NOE letter. You can find more information about RC-SBP on the election form itself, on DFAS’s website, and a variety of other open sources. Please review the program details carefully and consider the effects of your decision before making an election.
Electing to decline RC-SBP coverage (Option A) within the 90 days following your NOE receipt means you will not have another opportunity to select SBP coverage until you Retire With Pay, essentially age 60. In the event you decline RC-SBP coverage and die prior to your 60th birthday, no survivor benefits will be paid. Electing Option C basically means that you would have that benefit available to your eligible beneficiaries during your Gray Area years. Should you want to reduce the election level when you Retire with Pay, the higher premiums will still be recouped for the first two years and one month of your Retired Pay at the higher benefit level whether elected or defaulted.
KEEP YOUR LEADERSHIP INFORMED
As your end of service date approaches, talk with your career counselor and command leadership. Per NAVADMIN 243/14, Reserve members are to receive their retirement counseling from their career counselor through a Career Development Board for Enlisted Sailors or from the Commanding Officer through Mid-Term Counseling for Officers.
RETIREMENT WITHOUT PAY
Beginning March 2019, Reserve Component members are directed to submit retirement requests via the NSIPS Employee Self-Service Retirements and Separations module. Retirements Without Pay are effective the first day of the given month. For those reaching HYT or statutory limits, this is the first of the month following that date.
PERS-912 recommends applying at least six months prior to your requested retirement effective date. This lead time allows for the routing of requests and communication with your unit, NOSC or Program Office and your supported command. A change expected to be announced soon by NAVADMIN should allow members to submit a retirement request once they’ve accrued 19 qualifying years, as opposed to only after accruing 20 qualifying years. This change should solve significant administrative challenges for members who would otherwise be mandatorily separated due to HYT or statutory limits prior to effectively retiring after 20 Qualifying Years..
Retirement With Pay is effective on your Retired Pay Eligibility Date, nominally your 60th birthday. If you have estimated your Retired Pay Eligibility Date (RPED) and believe you are eligible to retire directly to a Retired With Pay status, see that section below.
Using NSIPS, you can track your retirement request through the approval process, much like orders in the Navy Reserve Order Writing System (NROWS). Retirement requests are routed from the member; often times through designated unit personnel, then certainly through your NOSC or Program Office, and then to NPC. Once fully approved, NPC will mail you a retirement orders letter, a certificate of appreciation and a retirement information sheet. Upon receipt, you should then contact MNCC by phone or email to initiate a service request to find out what PERS-912 determined to be your RPED, if other than your 60th birthday.
Make a note of this important future milestone as a record in your personal Navy Reserve retirement files. Store these files in a safe location and ensure your dependent(s) and/or executor of your estate knows how to access them. These files should absolutely include any DD-214s received over your career as well as your official Statement of Service. Organizations such as the VA may require these documents as proof of eligibility for various benefits.
Once you have retired, you are no longer earning Reserve retirement points or Reserve pay; however, you are not yet collecting retired pay. You are now officially in the Gray Area — a time frame lasting from your initial retirement until you are eligible to draw retired pay. For some members, this could be as long as 22 years. As a Gray Area retiree, make sure you tend to several important tasks, decisions and milestones. First, get your Retired Reserve ID card from your local ID card office. While in the Gray Area, and until age 60, you are eligible for TRICARE Retired Reserve health benefits, though the premiums tend to be significantly higher than TRICARE Reserve Select for the same coverage. You’ll want to consider this cost in balancing your health care needs with your insurance options. During these years, it is paramount that you as the member keep the Navy informed of any life changes you may experience. Specifically, contact both NPC PERS-912 through MNCC and the DEERS ID Card Office online or in person if you have any changes in name, address, contact information or marital or dependency status. Not doing so could result in significant delays in drawing retired pay and cause issues with benefits such as TRICARE and RC-SBP. You must also report any qualifying life events that could affect your status with eligible dependents for survivor benefits (such as marriage, divorce, re-marriage, birth, death or adoption) within one year of that event. Once again, take a good look at your point record. You can still make final point capture corrections, if needed. You may still perform Funeral Honors, for a cash stipend, and you may apply to serve on the Secretary of the Navy’s Retiree Council, or volunteer with an existing or establish a new Retired Activities Office in your geographic area. You should also keep apprised of any changes in retiree benefits as well as retirement with pay processes, timelines, forms and related systems. One way to do this is to regularly read the publication “Shift Colors,” which can be found electronically on the NPC website under OPNAV N17 Retired Affairs.
RETIREMENT WITH PAY
Your Retirement Pay Eligibility Date will nominally be your 60th birthday. However, receiving retirement pay is not automatic. Members eligible for Retirement With Pay (also known as Non-Regular Retirement) must submit their request through PERS-912. This includes the Application for Retired Pay Benefits (DD Form 108) and Data for Payment of Retired Personnel (DD Form 2656). If you are a current Reserve member expecting to retire directly into the Retired With Pay status, expect to submit your request electronically through the NSIPS Employee Self Service, Retirements and Separations module. You must have both DD Forms 2656 and 108 completed, signed and uploaded along with your NSIPS request. If you do not have access to NSIPS, requests must be mailed to PERS-912.
There are exceptions allowing you to retire with pay before age 60.
National Defense Authorization Acts (NDAA) 2008
- This law lowers the Retired With Pay date (age 60) by three months for every 90-day aggregate of active duty service completed in a fiscal year. For example, if a Sailor served 180 days in a fiscal year, they would be eligible to retire 6 months early.
National Defense Authorization Acts (NDAA) 2015
– This amendment allows 90 day aggregates of active duty to cross into any two consecutive fiscal years. However, this change applies only to qualifying periods of duty after the fiscal year 2015 effective date.
Note that regular active duty service does not qualify under NDAA. Additionally, TRICARE medical benefits eligibility remains at age 60 regardless of early retirement eligibility. The most your RPED may be reduced under these updated provisions is age 50. You can run your own unofficial calculation using the spreadsheet found on the NPC Reserve Retirements website. Annual Training orders (AT) never count toward these aggregates. ADT, ADSW, Mobilizations and Recalls — with certain exceptions — are calculated by PERS-912 unofficially during the Retirement Without Pay process and officially during the Retirement With Pay process. This is completed automatically as part of your submission for Retirement Without Pay. PERS-912 performs this service only upon receipt of your retirement request.
PERS-912 recommends applying for your retired pay up to a full calendar year in advance of your RPED. At the time of finalizing this article in January 2020, PERS-912 was currently processing Retirements With Pay received in May 2019. Requests are processed by date received, not by Retirement Pay Eligibility Date or other means. If you delay submitting your request, your pay will also be delayed, due to the processing time and other factors that may be outside of PERS-912’s control.
Your unique situation may mean you have additional timing factors to consider. You may be trying to Retire With Pay as soon as possible from coming off active duty orders, so you’d need to factor in your active duty terminal leave accrued and then the time required for the Reserve component to re-gain you. Also, the first step in the retirement process from PERS-912’s perspective is to close out your point record, meaning you must no longer be accruing retirement points in order for the staff to begin processing your retirement request. If you continue to accrue points, they will be unable to close out your point record, and your request will be delayed. Retired Pay that is delayed will eventually be back-paid, but it is time-limited to six years per the Barring Act. Some members may also have age waivers or continuation boards creating additional time factors to consider.
Fulfilling your own personal obligations is another key step as you prepare to submit for retirement pay. You must personally account for your incurred service obligations. If you request to retire prior to your service obligation end date, you may be liable for recoupment of any benefits used. Also, plan time for the transfer of your earned Post 9/11 GI Bill to your dependent(s), if necessary and account for any time you may spend on terminal leave.
In any case, approximately ten months prior to your RPED, PERS-912 typically mails a letter to your address on file, advising you of how to submit an application for retired pay. If you have not received notification at least four months prior to reaching age 60 (or your reduced RPED date), contact PERS-912 via the MNCC. Marking your calendar for these important milestones and making a note of them in your personal retirement preparations can prove quite helpful to you.
As is the same with the Retirement Without Pay process, PERS-912 cannot begin processing your request for Retirement With Pay from the Reserve component if you are on orders as a member of the active component. If you intend to retire soon after a late career mobilization, recall or ADSW orders, you must first be gained back into the Reserve Component before your request can be processed. PERS-912’s first step in the process is to close out your point record. Put simply, you must stop drilling and taking on orders or your request will continue to be in a holding pattern, and your retired pay will be delayed.
Once PERS-912 processes your retirement request and it is sent to DFAS, you will receive your retirement orders and can procure a new retiree ID card at your local ID card office. After this, allow a couple of months to finalize with DFAS the activation of your Retired Pay Account.
You will separately need to work with TRICARE to transition your health benefits. Be sure to pay attention to key timing milestones, as well as your medical benefit details in relation to your Medicare options as you approach age 65. Also look into how your Social Security benefits come in to play. A great resource available to you as you take these next big steps is to seek out assistance from your local Retired Activities Office, local accredited veteran services organizations and the Veterans Administration, as well as making an appointment with your local Social Security office.
As you think ahead to your retirement, the most important thing to remember is that you are in charge of the process. Any amount of time you allow for thoughtful planning and research on the process will pay big dividends in mitigating any potential frustrations in the future and ultimately in enjoying the retirement that you earned.
A great resource is on the Career Compass Facebook page at https://www.facebook.com/NavyReserveCareerCompass/
. Look under Events on the page for “Navigating Reserve Retirement FB Live.” Also visit the NPC Reserve Retirements webpage at https://www.public.navy.mil/bupers-npc/career/reservepersonnelmgmt/ReserveRetirements/Pages/default.aspx
. This page contains a recent version of the Navy Reserve Retirements Pay & Benefits brief delivered at the 2019 Retirement Awareness Workshop.