The decision to elect a lump sum at retirement is entirely up to you.
you do not choose the lump sum option, you'll receive your full
retired pay upon
eligibility. If you do opt for a lump sum, you'll need to decide if you want 25 or 50
percent of your future retirement payments at retirement. You may receive one
lump sum payment or annual equal payments
one a year for up to four years.
Monthly retired pay reverts to the full amount at full Social Security age, which for
most is age 67.
When you take either 25 or 50 percent in a lump sum, your monthly
retired paycheck will then be 75 or 50 percent of the full value of your monthly
retired pay until you reach full Social Security retirement age.
The lump sum of 25 or 50 percent is discounted to the present value
based on an annual DoD discount rate published in June of each year. Note that a
lifetime of equal, non-discounted monthly payments is worth more. For most
service members, a guaranteed stream of income for life is likely a better option
than a lump sum.
If choosing the lump sum option, you must notify your human resources
no less than 90 days before retirement
and for National Guard and
Reservists no less than 90 days before receipt of monthly retired pay (which is at
age 60, or earlier based on creditable active service).
Lump sum payments are considered earned income. Depending
on how much money it is, that
might push you into a higher tax bracket
Payments for the Survivor Benefit Plan will still be
deducted from your remaining monthly retired pay
should you elect the
If you expect to receive a disability rating from the
Department of Veterans Affairs, dependent upon your rating,
compensation could be offset.
Learn more about BRS at
Explore Military OneSource and other financial resources at
Locate an accredited personal financial manager or counselor at your
installation's Military and Family Support Center, or search at
The DoD does not take a position on which retirement system a service member should choose.