Military retirement comes in three "flavors" depending upon when the servicemember entered active duty. In all cases, a minimum of 20 years creditable service is needed to retire. Note that retirement is calculated using base pay only, and not allowances such as BAH or BAS.

1. High-3. (Most common type now - applies if entered service from 9/8/1980 onwards). Similar to the Final Pay system, except the 2.5% multiplier is applied against the average basic pay for the highest 36 months of the servicemember's career (generally will be the final three years, unless the servicemember has been reduced in grade administratively or at a court-martial). A COLA is given annually, based upon the Consumer Price Index.
2. Final Pay. (Prior system - applies if entered service before 9/8/1980). Each year of military service is worth 2.5% towards the retirement multiplier up to a maximum of 75%. A servicemember retiring at 20 years receives 50% (20 years x 2.5%) of his/her final basic pay. A COLA is given annually, based upon the Consumer Price Index.
3. REDUX. (Entered service from 8/1/1986 onwards, if the servicemember elected to receive the Career Status Bonus). Each year of the first 20 is worth 2% towards the retirement multiplier, and each year after 20 is worth 3.5%. The multiplier is then applied against the average basic pay for the highest 36 months. Thus, a servicemember retiring at 20 years receives only 40% (20 years x 2%), but it increases to 75% at 30 years (40%, plus 10 years x 3.5%). A COLA is given annually, but it is 1% below the Consumer Price Index (with a recalculation at age 62). This complicated mess is the least favorable of the three types of military retirement.

Thrift Savings Plan (TSP)

Servicemembers may now contribute up to 7% of their basic pay to a Thrift Saving Plan, but with no matching funds from the federal government. In a nutshell, it is similar to a private sector 401(k) plan in that taxes are deferred on the contributions and appreciation until disbursement.  Contributions to a TSP do not affect the right to receive "standard" military retirement. And the divorce judge must sign a Qualified Domestic Relations Order to divide the TSP, which is separate and distinct from the division of military retirement in Colorado.