Retirement Date Optimizer

Monthly pension = (multiplier) × (high-3 average base pay). The multiplier is 2.5% per year of service under High-3, or 2.0% under BRS. Years of service are credited in quarter-year increments (each completed 3-month quarter adds 0.625% under High-3 / 0.5% under BRS). The high-3 is the highest 36 months of base pay during your career, including any partial month of your retirement-effective month if you served any portion of it.

Each candidate retirement month assumes the most recent applicable Jan 1 base pay raise has taken effect. A candidate retirement of February 1, 2027 includes the January 1, 2027 raise in the high-3 averaging window. A candidate of December 1, 2026 does not. The default 3.5% / 3.0% raise estimates are conservative; adjust them if you have better information.

Under 10 U.S.C. § 1370, retiring at the current grade requires a minimum time-in-grade. If a candidate retirement date is before TIG-met, the optimizer flags it with a warning and computes pension at the previous rank's pay table at the same YOS. The TIG defaults applied: O-4 = 6 months, O-5/O-6/O-7+ = 3 years, E-7+ = 3 years (varies slightly by service; see your branch instruction).

Each candidate retirement date is checked against your DOR to determine completed quarter-years. A retirement that captures an additional completed quarter (e.g., crossing a Sept 30 boundary) adds 0.625% to your multiplier under High-3. The full table flags candidates that capture an additional quarter so you can see the impact directly.

Per 10 U.S.C. § 1401a(b)(2), retirees with less than one year of retired status on the COLA effective date (December 1) receive a quarter-based prorated COLA on their first January check: Q1 (Jan–Mar) = 100%, Q2 (Apr–Jun) = 75%, Q3 (Jul–Sep) = 50%, Q4 (Oct–Dec) = 25%. This is a permanent compounding gap — subsequent COLAs apply to the lower base forever. The optimizer surfaces this in three places: each candidate’s "First COLA" column (color-coded by quarter), each podium card’s 30-year lifetime value, and a dedicated proration breakdown in the calculation panel below. Lifetime value assumes a 2.5% long-term average annual COLA based on historical CPI-W trends; actual COLAs vary year to year. The lifetime value is informational — the date-sweep ranking still uses monthly pension as the primary metric so users can choose how to weight the trade-offs.

v1 focuses on the core monthly-pension optimization plus the terminal-leave / sell-back / hybrid leave-strategy comparison, the backward-planning timeline, and first-year COLA proration. Two date-driven optimizations are planned for v2: tax-year split timing (a Dec 28 vs Jan 5 retirement shifts $50–200K of taxable income between years — particularly relevant when sell-back lump sums stack on full-year active-duty pay) and a state residency timing callout (when to establish residency in your destination state to make retired pay tax-free from day one). Other transition decisions live in their proper homes: SkillBridge planning is flagged here but covered in depth at Separation Timeline; federal-employment timing is at Military Buyback Calculator; Roth conversions during the post-retirement low-bracket window are flagged on the calendar at Separation Timeline (see the 90-Days-After milestone); and the SBP-vs-term-insurance decision deserves its own analysis at Life Insurance Comparison.

Under 10 U.S.C. § 1370, retiring at a given officer grade requires a minimum time-in-grade at that grade. The default for O-4 is 6 months; for O-5, O-6, and O-7+ it is 3 years. If you retire before meeting TIG at your current grade, DFAS pays you at the previous grade's pay table for life — often $500–$1,000/month less. The TIG rule is the single most-violated military retirement timing trap because the calendar is inflexible: an O-5 pinned May 1, 2024 cannot retire as O-5 until May 1, 2027.

The military annual base pay raise takes effect every January 1. Your high-3 average is the highest 36 months of base pay during your career. Retiring in February captures one full month of the new pay rate; retiring in December captures none. For most senior officers, the difference between a December and a February retirement is $20–50/month for life — modest individually but meaningful over a 30-year retirement. The optimizer above shows this delta directly.

DFAS calculates years of service in quarter-year increments. Each completed 3-month quarter adds 0.625% to your retirement multiplier under High-3 (or 0.5% under BRS). A retirement date that completes another quarter — for example, retiring on October 1 instead of September 1 to capture another quarter that ends Sept 30 — adds permanent monthly pay. Most retirees do not realize this, and the optimizer flags candidate dates that capture an additional quarter.

Benefits Delivery at Discharge (BDD) is the VA program that lets you file a disability claim 180 to 90 days before your separation date — and have your VA decision in hand the day you retire. To qualify, you need at least 90 days remaining on active duty when you file, and you must complete required medical examinations before separation. The optimizer auto-populates the BDD window for any candidate retirement date so you can plan filing accordingly. Filing within this window is the single most valuable timing optimization in the entire transition.

Active-duty retirement effective dates are always the 1st of a month under DFAS pay-cycle conventions. Your separation date — the last day on active duty — is the last day of the prior month. So a "September 2026 retirement" means separation August 31, 2026 with retired pay starting September 1. The optimizer presents candidate retirement months in this convention; the BDD, SBP, VGLI, and TAMP deadlines are calculated from the separation date.

Take terminal leave and build a transition fund equal to what sell-back would have paid you. The math is unambiguous: terminal leave nets several thousand dollars more than sell-back because BAH and BAS continue while you’re on leave but evaporate when sold. For an O-5 with $2,500 BAH and BAS at $329.79/mo, those allowances total $94/day — over 60 days that’s about $5,600 of tax-free money you keep with terminal leave. Sell-back also withholds at the IRS supplemental rate of 22%. The real reason most retirees consider sell-back is the lump-sum cash. The better approach: during your last 6–12 months of service, direct existing TSP allotments or BAH allowances into a dedicated savings account to build a 2-month essential-expenses fund. Then take terminal leave and you keep both the higher net AND the liquidity. Sell-back is a fallback for rare cases — a hard civilian start date that overlaps separation, a medical or family emergency forcing immediate departure, or a documented preference for clean-break despite the lower net. Combat-zone leave sells back tax-free; that’s the one case where partial sell-back has a small tax advantage worth weighing.

Federal law prorates the first-year COLA for new retirees based on the quarter of the year they retired in (10 U.S.C. § 1401a(b)(2)). Q1 retirees (Jan–Mar) get the full 100% COLA on their first January check; Q2 (Apr–Jun) gets 75%; Q3 (Jul–Sep) gets 50%; Q4 (Oct–Dec) gets only 25%. After year one, all retirees receive 100% of each year’s COLA — but the first-year gap compounds forever because every subsequent COLA applies to the lower base. A November retiree, for example, gets 25% of the next COLA in their first January check; over 30 years of compounding, that early shortfall represents a meaningful lifetime gap relative to a January retiree at the same pension level. This is a major reason January-effective retirement dates are often optimal even when monthly pension differences are small.

SkillBridge (10 U.S.C. § 1143; DoD Instruction 1322.29) lets eligible service members spend up to the final 180 days of service in a civilian internship, fellowship, or job training while remaining on active-duty pay and benefits. For retirees, this dramatically reshapes the calendar: your last day at your real command can be 6 months before separation, before any permissive TDY or terminal leave even begins. Combined with 20 days of permissive TDY and 60 days of terminal leave, a retirement-effective Sep 1, 2027 could mean your last day in uniform at your assigned command was around February 2027 — 7 months earlier than the optimizer’s default timeline shows. Important caveats: (1) Command approval is required and varies widely by command culture; some routinely approve, others routinely deny. (2) You generally need an identified host organization before applying. (3) Begin the conversation at least 12 months before separation. (4) Some commands restrict whether you can stack permissive TDY after SkillBridge. (5) Eligibility requires at least 180 days remaining when you start. The optimizer above does not yet model SkillBridge windows; treat it as an additional 180-day shift backward on the timeline if you intend to use it.