Use the Continuation Pay Calculator to quickly determine your lump sum bonus, the required annual basic pay, or the specific multiplier factor based on your commitment agreement terms.
Continuation Pay Calculator
Calculated Result:
—Detailed Calculation Steps
Enter your inputs and click ‘Calculate’ to view the steps.
Continuation Pay Formula
L = P \times M (To solve for Lump Sum)
P = L / M (To solve for Annual Pay)
M = L / P (To solve for Multiplier)
Variables Explained
The calculator uses three primary variables to determine the Continuation Pay agreement components:
- Annual Basic Pay (P): The yearly base salary or pay rate of the individual, which is used as the basis for the bonus calculation. This is typically the rate at the time of the agreement.
- Continuation Pay Multiplier (M): The fixed factor (usually between 0.5 and 10) specified in the retention agreement that determines the size of the lump sum payment.
- Total Lump Sum Payment (L): The final, one-time payment amount received by the individual in exchange for committing to an extended period of service.
Related Calculators
What is Continuation Pay?
Continuation Pay (CP) is a financial incentive offered to eligible personnel, most commonly in military services (like the U.S. military’s Blended Retirement System or BRS), who agree to serve for an additional period, typically four years. It acts as a retention bonus paid out as a lump sum midway through a career, often around the 12-year mark.
The primary purpose of CP is to encourage mid-career retention among skilled professionals, ensuring the service retains experienced talent. The amount is usually calculated as a multiplier of the individual’s monthly or annual basic pay, with the multiplier determined by the service branch and current needs.
Unlike traditional salary, Continuation Pay is a one-time bonus. Recipients should note that CP is subject to federal and state income taxes, and tax withholding may significantly reduce the actual amount received upfront.
How to Calculate Continuation Pay (Example)
- Identify Known Variables: Assume an individual’s Annual Basic Pay (P) is $80,000, and the agreed-upon Continuation Pay Multiplier (M) is 3.5. We need to solve for the Lump Sum Payment (L).
- Apply the Formula: Use the primary formula for the lump sum: $$ L = P \times M $$
- Substitute Values: $$ L = \$80,000 \times 3.5 $$
- Calculate the Result: $$ L = \$280,000 $$
- Conclusion: The total Continuation Pay lump sum is $280,000 before taxes.
Frequently Asked Questions (FAQ)
Is Continuation Pay taxable?
Yes, Continuation Pay is generally subject to federal and state income taxes. The amount received is a lump sum bonus, and the tax implications should be reviewed by a financial professional.
When is Continuation Pay paid out?
Under the Blended Retirement System (BRS), Continuation Pay is typically offered to service members who have completed 12 years of service and is paid in exchange for an additional service commitment (usually four years).
What is a typical Continuation Pay Multiplier?
Multipliers vary widely depending on the service branch, pay grade, military occupational specialty (MOS), and current retention needs. They can range from 2.5 times basic monthly pay up to 13 times, which can translate to 0.2 to over 1.0 times annual basic pay.
Can I use this calculator to solve for my Multiplier?
Yes. If you know your Annual Basic Pay (P) and the Total Lump Sum Payment (L) offered, leave the Multiplier (M) blank. The calculator will determine the multiplier that satisfies the equation ($$ M = L / P $$).