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Understanding Retainer vs Retired

After a number of years of military service, you can retire. However, the number of years you have to serve differs between the branches.

If you serve in the Army, Air Force, or Coast Guard, you can retire after 20 years of military service.

The Navy and the Marine Corps have elected to be different. For Navy and Marine Corps members, you are considered to be a retired member for classification purposes if you are

  • An enlisted member with more than 30 years of service
  • A warrant or commissioned officer with 20 or more years of military service

Enlisted Navy and Marine Corps members with less than 30 years of service but more than 20 years are transferred to the Fleet Reserve/Fleet Marine Corps Reserve, and their pay is referred to as retainer pay.

When an enlisted Navy or Marine Corps member completes 30 years, including time on the retired rolls in receipt of retainer pay, the Fleet Reserve status is changed to retired status, and he begins receiving retired pay.

To clarify, the law treats retired pay and retainer pay exactly the same way. The amount of retainer pay you receive is the exact same amount as retired pay.

Becoming “Unretired:” Recall to Active Duty

One of the reasons that the Navy and Marine Corps use the term “retainer” for some of their retirees is that they want to emphasize to the member, to Congress, and to the general public that the military retirement system is different. Members — especially those who have recently retired — can be recalled to active duty anytime the service wants them. For this reason, military officials often refer to military retirement/retainer pay as “reduced pay for reduced services.”

Younger retirees who are healthy are more likely to be recalled to active duty in times of need than older retirees or those with a disability.

Department of Defense (DOD) Directive 1352.1 places retirees into one of three categories, with Category I the most likely to be recalled during times of war, national emergency, or “needs of the service”:

  • Category I: Nondisabled military retirees under age 60 who have been retired less than five years.
  • Category II: Nondisabled military retirees under age 60 who have been retired five years or more.
  • Category III: Military retirees, age 60 or older, and those retired for disability.

Military retired members of any age can be recalled to active duty to face court-martial charges. However, that this does not happen very often. In most cases, the military allows the civilian justice system to process military retirees who engage in misconduct.

Retirement Versus Discharge

Another difference between the military retirement program and most civilian retirement systems is that there is no vesting.  You either qualify for retirement by honorably serving at least 20 years in the military, or you do not.

If you are discharged from the military with 19 years, 11 months, and 27 days of service, for example, you do not qualify for retirement pay (other than a few early retirement programs offered during the 1980s and 1990s, which were designed to reduce the size of the armed forces).

Additionally, to be entitled to receive retirement pay from the military, your service must be characterized as honorable.

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