The National Defense Authorization Act for Fiscal Year 2007 lifted the cap for military retirement pay. Previously, retirement pay was limited to 75% of the base pay for 30 years of service. Anyone who served more than 30 years did not receive any additional compensation.

Military members who retire under the Final Pay or High 36 retirement system are eligible to retire when they reach 20 years of service. If they retire at that point, they will receive 50% of their base pay. For each additional year they serve, they will receive an additional 2.5% of their base pay. Previously, the limit was capped at 75% of the base pay, which is reached at 30 years. There is no longer a limit, and people who serve more than 40 year can actually receive in excess of the retirement base pay. However, there are limitations on who can serve in the military that long - it is generally only the highest ranks who are allowed to remain in service that long. This is because their knowledge and experience is considered so valuable.

The military retirement system can be very complex. For more information I recommend visiting your local finance office or military.com’s military retirement pay section. You can also contact me and if I don’t have the answer, I will do my best to find it and get back to you! :)

Source - DFAS: Defense Finance and Accounting Service - Retired and Annuitant Pay: Retired Pay Cap Lifted