Reserve Retirement Math: Converting Your Points to Cash Money

For the Citizen Sailor readership, this is a reasonable, common sense attempt to equate our retirement points to future dollars earned. We welcome feedback and constructive criticism.

Some SELRES were sitting around one drill weekend, waiting on NKO to come back up and trying to figure out exactly how much a drill point was worth. Being a reservist is like dealing with airline miles or getting tickets at the arcade, their value is tough to determine because they are valueless outside of their own system. We know there plenty of retirement calculators out there that can take your years of active service and drill weekends and total points amassed and give you a number, but what is a point really worth? Beyond national pride and patriotism, why should you take the time to log in to NKO and do anything beyond the minimum?

Against all odds, we did the math to figure out what the monetized value of a single point was based on the lowest standard ranks of retirement E-6 and O-4. If you’re a retiring O-3 LDO, then swag it somewhere in between.

As a retiring sailor, your standard pension is 1/2 of you base pay at 20years. In the reserves, 1 day of active duty = 1 point. Take 20 years and multiply by 365 which give you 7,300 points in a 20 year active duty retirement for 50% of your base pay.

Therefore 7,300 points = 50% your base pay.

As an E-6, the 2014 monthly base pay at 20 years is $3,687.30 . Divided by two, this leaves $1,843.65 which is the monthly payout of an active duty 20 year retiree. Then taking $1,843.65 and dividing by 7,300 points, you get $0.253 per month per point. If you figure a standard drill weekend is 4 points plus completing a couple of NKO courses, you’re accruing a future pension payout of $1.00 – $1.50 per month for every drill weekend you complete, plus getting paid for the weekend on top of that.

Just to restate clearly, each NKO course worth 1 point nets you an added $0.253 per month in pension payout. Rates go up from there if you promote or become an officer.

On the officer side, as an O-4 the 2014 monthly base pay at 20 years is $7,356.60. Divided by two, this leaves $3,678.3. Then taking the $3,678.3 and dividing by 7,300 points, you get an added $0.504 per month per point. You can extrapolate from there.

The numbers go up from there if you promote beyond the minimum retiring ranks.

So what’s the moral of the story? Every little NKO course helps you achieve a little more for your pocket. To prove the point, we calculated that an O-3 who gets out at 6.5 years and completes 7 points in NKO courses per month then retires as an O-6 at 30 years can add an EXTRA $1,400 to the pension check every month just from NKO courses alone. In other words, the Captain raised his pension payout from 28% to 42% of his final base pay.

Not a bad payout for fighting NKO for a couple hours every month.

That’s how it works in theory, being able to execute that over 30 years is a different story.

Again, we welcome feedback and constructive criticism.

Disclaimer: A special note to Sea Lawyers, Scammers and Excuse Mongers: All of the following math has been done on the back of the napkin by someone who did not major in finance in college, but it has been rechecked and appears valid. This was not handed down on stone tablets from Mount Sinai nor does staff of The Citizen Sailor pretend to represent any official entities that have to do with the calculations or disbursements of your pension. If you attempt to use us as a reference or witness in a court of law, we will roll our eyes, groan and comply with whatever the federal authorities tell us we have to do to convince that court that we are NOT subject matter experts on military disbursements, pensions or government annuities. Abandon all hope, ye foolish who enter here.