Retired Pay Math: High-3, CRDP, and CRSC

The short version

Military retired pay is a formula: your High-3 average basic pay, times years of service, times a multiplier (2.5 percent per year under the legacy system, 2.0 percent under BRS). For most, it takes 20 years of service to collect anything, which is the famous cliff. If you also receive VA disability compensation, the old rule made you give up a dollar of retired pay for every dollar of VA pay. Two programs undo that offset: CRDP restores retired pay for 20-year retirees rated 50 percent or higher, and CRSC replaces it, tax-free, for combat-related disabilities. Run your own numbers with the DoD calculators before you believe anyone's estimate, including your own.

The formula and the 20-year cliff

Every retired pay estimate starts with three inputs.

• High-3: the average of your highest 36 months of basic pay, usually your last three years. Allowances like BAH and BAS don't count, which is why retired pay feels smaller than your take-home ever did.
• The multiplier: legacy High-3 members earn 2.5 percent per year of service; BRS members earn 2.0 percent. Twenty years means 50 percent of High-3 under legacy, 40 percent under BRS, which is why BRS pairs the smaller pension with TSP matching.
• The cliff is real: an active-duty retirement generally requires 20 years. Separate at 19 and, outside medical retirement or rare early-out programs, the pension is zero. BRS softened this (the TSP match goes with you whenever you leave), but the pension itself is still all-or-nothing.
• COLA follows: retired pay gets annual cost-of-living adjustments, so the check keeps pace with inflation.

Source: DoD

The VA offset, in plain terms

VA disability compensation is tax-free; retired pay is not. Congress historically said you couldn't stack them.

• The waiver: to receive VA disability compensation, retirees waived an equal amount of retired pay, trading taxable dollars for tax-free ones, but not gaining a dollar of total income.
• Why file anyway: the VA rating unlocks the tax advantage, healthcare, and other benefits, and it's the key that opens CRDP and CRSC.
• The fix has two doors: CRDP and CRSC both address the offset. You can be eligible for both, but you can only collect one at a time.

CRDP: concurrent receipt for 50 percent and up

Concurrent Retirement and Disability Pay restores the retired pay the offset took.

• Who qualifies: retirees with 20 or more qualifying years and a VA rating of 50 percent or higher. Guard and Reserve retirees qualify once they're drawing retired pay.
• How it works: no application needed. DFAS pays it automatically. You receive your full retired pay (taxable) plus full VA compensation (tax-free).
• What's pending, not passed: the Major Richard Star Act would extend concurrent receipt to combat-injured retirees with under 20 years. As of mid-2026 it has broad co-sponsorship but has not become law. Verify current status before counting on it.

Source: DFAS

CRSC: tax-free money for combat-related disabilities

Combat-Related Special Compensation targets disabilities from armed conflict, hazardous duty, training that simulates war, or an instrumentality of war.

• Who qualifies: retirees with a combat-related disability rated 10 percent or higher, including medical (Chapter 61) retirees with less than 20 years.
• You must apply: unlike CRDP, CRSC goes through your branch of service, with documentation tying the disability to a combat-related event.
• The tax edge: CRSC is not taxed; CRDP is. If you're eligible for both, DFAS runs an annual open season each January letting you switch, and the tax-free nature of CRSC often, but not always, makes it the better deal. Do the math both ways.

CRDP and CRSC exist for one reason: so a disability rating doesn't quietly eat the pension you earned.

Source: DFAS

Run your own numbers

Don't build a transition budget on hallway math.

• Use the DoD calculators: the official retirement calculators model High-3 and BRS with your actual dates and pay grades.
• Estimate three lines: retired pay, expected VA compensation by rating, and any CRDP/CRSC restoration. Then remember that only some of it is taxable.
• Fold it into the bigger checklist: retired pay decisions ride alongside SBP elections and everything else on your last-year money checklist.

Do this now

1. Pull your record: verify your pay entry date, years of service, and highest 36 months of basic pay before running any estimate.
2. Run the DoD calculator: model your retired pay at your planned retirement date, plus one year earlier and later, at militarypay.defense.gov.
3. File your VA claim on time: start through the Benefits Delivery at Discharge program in your final six months so ratings (and CRDP or CRSC) start sooner.
4. If any disability is combat-related, apply for CRSC: gather the documentation now; your branch decides combat-relatedness, not the VA.

FAQ

Can I get both CRDP and CRSC?

You can be eligible for both, but you can only be paid one at a time. DFAS holds an open season each year where dual-eligible retirees can switch. Compare after-tax totals: CRSC is tax-free but only covers the combat-related portion of your rating; CRDP is taxable but covers the full offset for qualifying retirees.

I'm at 40 percent VA rating with 20 years. Do I get CRDP?

Not at 40 percent. CRDP starts at a 50 percent rating. Your retired pay remains offset by the VA compensation you receive, though the trade still nets you tax-free income in place of taxable income. If any of the disability is combat-related, CRSC may restore some of it regardless of the 50 percent line.

Does BRS change any of this?

The offset, CRDP, and CRSC rules work the same. What changes is the pension size (2.0 percent per year instead of 2.5) and the fact that your TSP balance plus match is yours even if you never reach 20 years, which the legacy system never offered.

Sources & links

• DoD, Military retirement pay overview: militarypay.defense.gov
• DoD, Retirement calculators: militarypay.defense.gov
• DFAS, Concurrent Retirement and Disability Pay (CRDP): dfas.mil
• DFAS, Combat-Related Special Compensation (CRSC): dfas.mil