3 Stars. 4 Stars. I’m The Guy With The Fat Check.

So the good General is retiring and the latest news from CNN is that he gets to keep his 4th General Star because the President said he could. But what does this really mean? Let me state right off the bat that all this information is publicly available. No big deal.

All the information:

Who is the General? (Wikipedia)

What is the salary of a specific rank or grade? (will download a PDF)

How is military retired pay calculated? (about.com article)

Did you know that Generals, in general (no pun intended) get paid less than what they would get if they were to retire? For the purpose of this post, I’m taking the liberty of dropping the cents. According to the military pay tables, the General’s (grade of O-10) base pay is listed at $17,785. But read the small print at the bottom to find out that the actual amount he can receive is currently capped at $14,975, and that’s just base pay. On top of the base pay, an additional $223 for subsistence (food) is awarded. I’m sure there are other specialty pays for the expenses that come with the current job, but these monies in effect get applied to expenses that would not have otherwise been incurred, so I’ll just disregard those. I hear you asking a question, “Why list a higher base pay if you’re just going to cap it?” Because there has to be some motivation to hang around for retirement! After all, retirement is not based on the capped pay, but the actual base pay. Retired pay is not capped.

So how is the General’s retired pay calculated? The General has over 34 years of service, I’ll just say 34 years and we’ll know that’s low-balling it. 34 years of active duty service will net the General 85% (a formula calculates 50% for 20 years of service with an additional 2.5% per year, prorated down to the month, and added to the 50%) of what his final base pay happens to be during his final month of active duty. We’ve already determined that to be $17,785, so that puts his retired pay at $15,117 per month or $181,000 annually. Now that’s a fat check!

So what’s the deal in the CNN article talking about the President letting him keep his 4th star? Nothing, really. Other than the pride that accompanies getting to say you were a 4-Star General and a war hero. It doesn’t have anything to do with the retired pay, since we’ve already established that retired pay is based off of whatever his last active duty base pay was, and that can’t be changed. After all, whether the General has 3, 4, or no stars, a $1.29 will still get him a cup of coffee at Denny’s. So the General is not really being hurt in any real sense of the word. He’s going to go ahead and retire and earn more disposable pay in the process while doing (relatively) infinitely less. And you know he’s probably going to go out there and get another lucrative job in the meantime.