How Much Does a Four-Star General Make in Retirement?

A four-star general’s retirement pay is a complex calculation, but broadly, it depends on their years of service and their “high-three” average, which is the average of their highest 36 months of basic pay. Typically, a four-star general retiring today can expect to receive retirement pay ranging from approximately $220,000 to $260,000 per year.

Understanding Military Retirement Pay

The United States military retirement system provides a pension and other benefits to service members after they have completed a specified period of service. For high-ranking officers like four-star generals, this retirement package can be substantial, reflecting their years of dedication and leadership. However, understanding the specifics requires delving into the factors that influence the final amount. Let’s break down the intricacies of how this retirement income is determined.

The High-Three System

One of the most common retirement systems for those who joined the military before January 1, 2018, is the High-Three System. This system calculates retirement pay based on the average of the service member’s highest 36 months (three years) of basic pay. For a four-star general, this calculation will almost always be based on their pay at that rank. In 2024, the basic pay for a four-star general exceeds $20,000 per month, translating to over $240,000 annually.

Years of Service and the Multiplier

The High-Three system uses a multiplier to determine the percentage of the “high-three” average that the retiree will receive. This multiplier is generally 2.5% per year of service. For example, a general who served 30 years would receive 75% (2.5% x 30) of their high-three average. However, under the High-Three system, the maximum retirement pay cannot exceed 75% of the high-three average, regardless of years of service.

The Blended Retirement System (BRS)

The Blended Retirement System (BRS), effective January 1, 2018, introduced significant changes to military retirement. BRS applies to all service members who entered the military on or after this date and those who opted into the system.

Under BRS, the multiplier for retirement pay is reduced to 2.0% per year of service. This means a four-star general retiring under BRS after 30 years of service would receive 60% (2.0% x 30) of their high-three average.

Thrift Savings Plan (TSP)

A key feature of the BRS is the Thrift Savings Plan (TSP), which is similar to a civilian 401(k). The government automatically contributes 1% of the service member’s basic pay to their TSP account, and they can receive matching contributions up to 5% of their pay. These TSP savings grow tax-deferred, providing an additional source of retirement income beyond the pension.

Other Factors Influencing Retirement Pay

While years of service and the high-three average are the primary factors, other elements can influence a four-star general’s retirement income:

• Cost of Living Adjustments (COLAs): Military retirement pay is subject to COLAs, which are annual adjustments to account for inflation. These COLAs help maintain the purchasing power of retirement income over time.
• Concurrent Receipt of Retirement Pay and VA Disability Compensation: A four-star general, like any veteran, may be eligible for disability compensation from the Department of Veterans Affairs (VA) if they have service-connected disabilities. Concurrent receipt rules determine whether they can receive both full retirement pay and VA disability compensation. The rules vary depending on the individual’s circumstances and length of service.
• Survivor Benefit Plan (SBP): The SBP allows retirees to provide a portion of their retirement pay to a surviving spouse or other eligible beneficiaries. Enrolling in the SBP reduces the retiree’s monthly pay but ensures financial security for their loved ones after their death.
• Taxes: Military retirement pay is taxable income at the federal level and may also be subject to state income taxes, depending on the state of residence. This is an essential consideration when estimating net retirement income.

The “Double Dipping” Myth and Post-Retirement Employment

The term “double dipping” sometimes arises when discussing military retirement, referring to the idea that retirees are receiving both a pension and a salary from another job. While it’s true that many retired four-star generals pursue post-retirement employment, there are limitations and considerations.

Many find positions in defense consulting, government contracting, academia, or corporate leadership. The skills and experience gained during their military careers are highly valuable in the civilian sector. It is important to remember that the opportunities available to a retired four-star general are limited.

FAQs: Four-Star General Retirement Pay

Here are some frequently asked questions concerning the pay and compensation that four-star generals can expect in retirement:

1. What is the basic monthly pay for a four-star general in 2024?

In 2024, the basic monthly pay for a four-star general is over $20,000. This figure serves as the basis for calculating retirement pay under both the High-Three system and the Blended Retirement System.

2. How does the BRS impact retirement pay compared to the High-Three system?

The BRS uses a lower multiplier (2.0% per year of service) than the High-Three system (2.5% per year of service). This generally results in a lower retirement pension under BRS, but the TSP component can help offset this difference.

3. Can a four-star general receive both retirement pay and VA disability compensation?

Yes, a four-star general can potentially receive both retirement pay and VA disability compensation. However, the rules governing concurrent receipt can be complex and depend on factors like the severity of the disability and the length of service.

4. Are there limits on post-retirement employment for four-star generals?

While there are no strict prohibitions against post-retirement employment, certain ethical considerations and restrictions may apply, particularly concerning defense-related industries. “Cooling-off” periods may restrict lobbying or working for companies on matters they handled while in uniform.

5. Does retirement pay for four-star generals increase over time?

Yes, military retirement pay is subject to Cost of Living Adjustments (COLAs), which are designed to keep pace with inflation. These COLAs ensure that the purchasing power of retirement income is maintained.

6. What is the Survivor Benefit Plan (SBP) and how does it affect retirement pay?

The Survivor Benefit Plan (SBP) allows a retiree to provide a portion of their retirement pay to a surviving spouse or other eligible beneficiary. Enrolling in the SBP reduces the retiree’s monthly pay but provides financial security for their loved ones.

7. How are taxes handled on a four-star general’s retirement pay?

Military retirement pay is considered taxable income at the federal level and may also be subject to state income taxes, depending on the state of residence.

8. Do four-star generals receive healthcare benefits in retirement?

Yes, retired four-star generals are eligible for TRICARE, the military’s healthcare program. TRICARE offers various plans with different coverage levels and costs.

9. How does promotion to four-star general affect lifetime retirement earnings?

Promotion to four-star general significantly increases lifetime retirement earnings due to the higher basic pay associated with the rank. This higher pay translates to a larger high-three average and, consequently, a higher retirement pension.

10. What resources are available to help four-star generals plan for retirement?

The military offers a range of retirement planning resources, including financial counseling, workshops, and online tools. These resources help service members understand their retirement benefits and make informed decisions about their financial future.

11. Can retirement pay be affected by misconduct during military service?

Yes, retirement pay can be affected by misconduct during military service. Serious offenses could lead to forfeiture of retirement benefits.

12. What are some common post-retirement career paths for four-star generals?

Common post-retirement career paths for four-star generals include defense consulting, government contracting, academia, corporate leadership, and non-profit work. Their leadership experience and strategic expertise are highly valued in these sectors.