By Jamie Johnson, WCI ContributorReceiving a military pension is one of the biggest perks for doctors serving in the military. You’ll receive a lifelong pension after 20 years of service, which is calculated at a percentage of your highest base pay.
Not only does this provide a guaranteed source of income in retirement, but the Blended Retirement System (BRS) and Thrift Savings Plan (TSP) offer even more ways to build wealth. Let’s look at how military doctor pensions work and how you can maximize your retirement savings to plan for life outside of the military.
How Do Military Doctors Earn Their Pensions?
Military doctors earn their pensions through the Military Retirement System, which operates as a defined benefit plan. That means you’re guaranteed to receive a set monthly income based on your years of service and salary, not your monthly contributions. Active-duty military doctors must complete 20 years of service to qualify for a pension, and retirement begins immediately after leaving the service.
One thing to note is that medical doctors often enter the service later due to their medical training. However, enrolling in programs like the Health Professions Scholarship Program (HPSP) or Uniformed Services University (USU) may count toward your total service years. Plus, any prior enlisted service may count toward your pension eligibility.
More information here:
Personal Finance for Military Physicians
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How Are Military Pensions Calculated?
Military pensions are based on a percentage of a servicemember’s pay and calculated using two different systems—the High 36 Retirement System or the Blended Retirement System. Which retirement system you’re enrolled in is determined by when you joined the military.
High 36 Retirement System
Anyone who joined the military before January 1, 2006, will be enrolled in the High 36 Retirement System. If you joined after January 1, 2006, but before December 31, 2017, you can choose between the High 36 and the BRS. This plan calculates your retirement pay using the average of your highest 36 months of pay.
Blended Retirement System (BRS)
Anyone who joined after December 31, 2017, will be enrolled in the BRS. The BRS calculates your retirement benefits using the following formula:
2% × years of service × retired based pay
Your pension payouts will be lower on the BRS, but the government also matches your contributions to a Thrift Savings Plan up to 4%. If you can choose which system to join but aren’t sure which is the best option, you can use a military pensions calculator to estimate your retirement pay.
How the Thrift Savings Plan (TSP) Works
The Thrift Savings Plan (TSP) is a retirement savings plan available to military members, including doctors. It’s similar to a 401(k) and allows service members to contribute a portion of their income to an investment account. You can choose pre-tax or after-tax contributions, and the plan comes with low investment costs.
In addition, military doctors on the BRS will receive matching government contributions. Even if you don’t contribute anything to your TPS, the government will automatically contribute 1% of your base pay. However, if you do contribute, the government will do a dollar-for-dollar match up to 3% and a 50% match on the next 2%.
In 2025, the standard contribution limits are $23,500, but doctors between the ages of 50 and 59 can make catch-up contributions of $7,500. If you’re over the age of 60, you can make a catch-up contribution of $11,250.
More information here:
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Tax Considerations for Retired Military Doctors
Military pensions offer a steady income in retirement, but you do have to account for taxes. Your pension will be taxed at the federal level, and you may also be taxed at the state level, depending on where you live. Here are a few strategies you can use to minimize your tax burden:
- Consider relocating: Moving to a tax-friendly state can be a good way to optimize your retirement savings. For instance, Texas and Florida don’t charge any state income taxes, and many states offer full or partial exemptions for military pensions.
- Consider a Backdoor IRA: If you exceed the traditional Roth IRA limits [in 2025, a MAGI of > $150,000 for single people and a MAGI of > $236,000 for MFJ], you might consider using a Backdoor Roth IRA so your income can grow tax-free.
- Delay Social Security benefits: Your military pension won’t affect your Social Security benefits, so delaying Social Security will allow you to receive the highest monthly benefits possible.
The Bottom Line
A military pension is one of the most valuable benefits military doctors receive because it’s a guaranteed income stream in retirement. However, your military pension on its own may not be enough to support your desired lifestyle in retirement. Combining your military pension with other investing strategies, like TPS contributions, will help you build long-term financial security.
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