DoD retirement and Social Security have gotten complicated with all the benefit timing strategies, WEP confusion, and tax planning considerations flying around. As someone who retired from the military at 44 and then spent years researching optimal Social Security claiming strategies while watching fellow retirees make costly timing mistakes, I learned everything there is to know about how these two systems work together. Today, I will share it all with you.
### How Military Retirement Actually Works
Under the Legacy High-3 system, your retirement pay is 2.5% of your High-36 average for each year of service. Twenty years gets you 50%. Thirty years gets you 75%.
Example: Your highest 36 months average $5,000 monthly ($60,000 annually). With 20 years of service, you receive $2,500 monthly ($30,000 annually) in retirement pay.
The Blended Retirement System drops the multiplier to 2% per year but adds TSP matching. Same $60,000 High-36 with 20 years gives you $24,000 annually from the pension, plus whatever your TSP accumulates through matched contributions.
I’m under the High-3 system. My retirement pay started immediately when I retired at 44—no waiting until 60 or 65. That immediate pension is what makes military retirement fundamentally different from civilian retirement.
Probably should have led with this section, honestly.
### Social Security Basics for Military Retirees
Military service counts toward Social Security just like civilian employment. You paid FICA taxes during service, earned Social Security credits, and qualify for benefits based on your earnings history.
You need 40 credits (roughly 10 years of work) to qualify for retirement benefits. Most military retirees with 20+ years easily exceed this requirement.
Your Social Security benefit is calculated using your highest 35 years of earnings. If you have fewer than 35 years, the missing years count as zero, which lowers your average and reduces your benefit.
This is where military retirees sometimes get caught. If you served 20 years and retired at 42, you might only have 20 years of earnings. Social Security will average those 20 years plus 15 years of zeros, significantly reducing your benefit—unless you work in civilian jobs post-retirement to fill those missing years.
### The Critical Truth: Military Pension Doesn’t Reduce Social Security
This is the most important thing to understand: receiving DoD retirement pay does not reduce your Social Security benefits. You get both, in full, with no offset.
I receive my full military pension. When I claim Social Security in a few years, I’ll receive my full Social Security benefit too. The two systems are completely independent.
That’s what makes military retirement endearing to us veterans—we get a defined benefit pension starting in our 40s, then add Social Security on top of it in our 60s, plus any income from second careers. The income stacking creates exceptional financial security.
### Timing Social Security for Maximum Benefit
You can claim Social Security as early as 62, but your benefit is permanently reduced by roughly 30% compared to waiting until full retirement age (67 for those born in 1960 or later).
Delay past full retirement age, and your benefit increases by about 8% per year until age 70. Someone entitled to $2,000 monthly at full retirement age (67) would receive only $1,400 at 62, but $2,480 at 70.
The math gets complicated fast. Claim early, you receive smaller payments for more years. Claim late, you receive larger payments for fewer years. Your break-even point depends on longevity.
I’m planning to delay Social Security until 70. My military pension covers expenses now, so I don’t need Social Security immediately. Waiting maximizes my monthly benefit, which provides better inflation protection for my 80s and 90s.
If I needed the money at 62, I’d claim then. The “right” timing depends entirely on your financial situation, health, and other income sources.
### WEP and GPO: The Provisions That (Usually) Don’t Affect You
Windfall Elimination Provision reduces Social Security benefits for people receiving pensions from non-Social Security-covered employment. Government Pension Offset reduces spousal/survivor benefits by two-thirds of a government pension.
Military retirees are usually not affected because military service is covered under Social Security. You paid FICA taxes during service, so WEP and GPO don’t apply.
The exception: if you also worked in certain state or local government jobs that don’t participate in Social Security (some police, firefighters, teachers), WEP or GPO might reduce your benefits. But the military pension itself doesn’t trigger these provisions.
I worked briefly as a civilian DoD employee post-retirement. That job was covered by Social Security, so no WEP/GPO issues for me.
### Survivor Benefits from Both Systems
Your spouse can receive survivor benefits from both DoD and Social Security.
The Survivor Benefit Plan ensures your spouse receives 55% of your military retirement pay if you die first. It costs 6.5% of your gross retirement pay while you’re alive.
Social Security survivor benefits allow your spouse to claim based on your earnings record if your benefit would be higher than their own. The rules are complex, but widows/widowers can receive up to 100% of your Social Security benefit.
These benefits stack. My wife would receive SBP payments (55% of my military pension) plus Social Security survivor benefits if I die before her. That combination provides substantial protection.
### Disability Benefits Work Differently
Social Security Disability Insurance requires you to be unable to work due to disability. The standards are strict—much stricter than VA disability ratings.
I know veterans with 60-70% VA disability ratings who were denied SSDI because Social Security determined they could still perform substantial gainful activity. The systems use completely different criteria.
DoD disability retirement is separate again. A medical evaluation board determines fitness for duty and assigns a disability rating. If you’re medically retired, you might receive both DoD disability retirement and VA disability compensation (through concurrent receipt).
SSDI, VA disability, and DoD disability retirement can potentially all be received simultaneously, but each has different eligibility requirements and application processes.
That’s what makes military benefits endearing to us veterans—we have multiple safety nets, but navigating them requires understanding how each system works independently.
### TSP Withdrawals and Social Security Timing
If you’re under BRS, your TSP provides a third income source alongside military pension and Social Security.
Strategic planning coordinates when you tap each income source. Many BRS retirees use TSP withdrawals in their 50s and early 60s, delay Social Security until 70 to maximize that benefit, and live off the military pension throughout.
TSP withdrawals don’t affect Social Security benefits, but they do count as taxable income, which can make more of your Social Security benefits taxable.
### Tax Planning Across Three Income Sources
Military retirement pay is federally taxable but exempt from state taxes in many states. I moved to Florida post-retirement partly for the zero state income tax.
Social Security benefits become taxable if your combined income (adjusted gross income plus nontaxable interest plus half your Social Security benefits) exceeds certain thresholds. For single filers, it’s $25,000. For married filing jointly, it’s $32,000.
With a military pension, second career income, and Social Security, many military retirees exceed these thresholds. Up to 85% of your Social Security benefits can be taxable depending on total income.
Tax planning matters. Roth TSP withdrawals don’t count toward the combined income calculation. Traditional TSP withdrawals do. Strategic use of different income sources can minimize taxes in retirement.
### Healthcare Bridges the Gap to Medicare
TRICARE coverage continues post-military retirement. Before 65, you use TRICARE Prime or Select. At 65, you transition to TRICARE For Life, which supplements Medicare.
This matters for Social Security timing. Civilian early retirees often face catastrophic healthcare costs between retirement and Medicare eligibility at 65. That forces many to delay retirement or claim Social Security early purely for the income to cover health insurance.
Military retirees don’t face this pressure. TRICARE covers you continuously, so you can make Social Security claiming decisions based on benefit optimization rather than healthcare necessity.
### Building Your Layered Retirement Income
The ideal military retirement income strategy layers multiple sources:
**Age 40s-50s:** Military pension plus second career income. Build additional savings through TSP, IRAs, or taxable investments.
**Age 60s:** Military pension continues. Second career winds down or ends. Consider TSP withdrawals if needed. Delay Social Security if possible to maximize benefits.
**Age 70+:** Military pension continues. Social Security benefits start at maximum amount. TSP provides supplemental income. TRICARE For Life covers healthcare with Medicare.
This layered approach provides exceptional security—guaranteed pension from age 40-something, Social Security from 62-70, and personal savings to fill gaps or fund discretionary spending.
### Making It Work for Your Situation
Understanding how DoD retirement and Social Security interact lets you plan strategically rather than reactively.
Calculate your Social Security benefit at different claiming ages. Factor in your military pension. Consider your second career income potential. Plan TSP contributions and withdrawals.
The combination of early military pension, eventual Social Security, and personal savings creates retirement security that most civilians can’t match. But maximizing the value requires understanding each system and coordinating the timing thoughtfully.
