Navy physician pay and pension

Stay or go?

Created by James M. Day for a graduate school economics project.

Contact: jday6@hawaii.edu

Version 2.9 · Updated October 4, 2026 · 2026 pay, tax, and benefit data

Compare staying to 20 with civilian practice, or Navy with civilian residency after a GMO tour.

Views are the author’s own and do not represent the U.S. Navy, the Department of Defense, or the U.S. government.

Your situation

Years left on obligation:
Enter an actual offer when available; typing a salary selects "My own offer."
Sets housing allowance (BAH).
Where you would work after leaving; sets state tax.

Or load an example

Refine (optional)

Taxes and spouse
Service members can keep a home-state residency while stationed elsewhere. Choosing a no-income-tax state such as Florida or Texas lowers Navy taxes.
Taxed on both paths; only the extra tax your pay causes is counted.Average: $65,000, the U.S. median for full-time workers (BLS, 2026 Q2).
Navy pay
Choose whether to assume renewed agreements, one agreement, or no bonus.
Pension and survivors
Pension rate: 3%. The pension rises with inflation and is federally backed, so it is valued near Treasury real yields (3.1–3.3% on Sept. 28, 2026).
Health and VA
KFF 2025 employer premiums minus the 2026 TRICARE Prime retiree fee.
Leaving starts tax-free VA pay now. Staying delays it to 20; at 50% or higher it is then paid on top of retired pay, below 50% it replaces part of it.
Civilian job
Starting value: 5%, a planning assumption. Someone who leaves now has years of civilian seniority, partnership, or productivity by the time a 20-year retiree starts over, and clinical skills can fade in late-career administrative jobs. 0% assumes no difference.
First-year pay: 100% is typical for employed jobs with a guaranteed starting salary; productivity-based jobs often pay less in year one. Real pay growth: 0%. Physician pay rose 2% in 2025 (Doximity 2026) while prices rose 3.4% (CPI, Aug. 2026). Cost of leaving: $2,500 for DEA registration ($888 per 3 years), a state license, and credentialing; relocation is often paid by the employer. Employer retirement: 4.6%, the average promised match (Vanguard, How America Saves 2025). Civilian family health premiums (KFF 2025 worker share) are always counted.
Reserve option
50 makes a qualifying year. 77 = 15 membership + 48 drills + 14 days of annual training.
60 by law. Each 90 days of qualifying mobilization moves it 3 months earlier.
Annual training usually takes two work weeks. Drills are usually weekends.
VA job option
The deposit adds your active years to your FERS service. Pay it within two years of starting at the VA to avoid interest. It is not allowed for years you draw Navy retired pay on, so it applies only when you leave before 20. The VA job lasts until the work-until age under Civilian job.
Your spending

Enter household spending and big expenses to put the financial difference in context. Set any amount to 0 to hide it.

Starting value: $120,000, a planning assumption, not an average. Enter your own.
2025–26 average full budget, including housing and food (College Board): public in-state $30,990 · private nonprofit $65,470
Changing course later

If staying now leads to a higher-paid civilian job later, for example after a Navy fellowship, enter it here.

Rough: Navy pay in the years before you leave uses your current specialty, not fellowship pay, and any fellowship obligation is not added. Enter fellowship payback under years left on obligation only if it applies now.
Discount rate for pay
Brings future pay back to today's dollars after inflation. It is higher than the pension rate because future salaries, especially a civilian job's, are less certain. Try 3% and 7% to see how much it matters.Starting value: 5% real, the rate used in the paper.
Staying to 20 versus leaving now
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Loading 2026 pay and tax data…

Pension and benefits kept—
Extra pay given up by staying—
Break-even—
Four paths compared

Compared with leaving for private practice, in today’s dollars after tax. Adjust Reserve and VA assumptions under Refine.

Reserve and VA calculation details

Does the difference change your plans?

Matching the pension by saving, by years already served
Years in nowYears left to 20Save each year

Weigh the financial difference alongside the work, location, deployments, and family priorities this model cannot price.

When does staying pay off?
Pension and benefits kept by stayingExtra civilian pay still to give up before 20

Can you change your mind later?

Leave atFree to leave?Versus leaving now

What moves your answer most

Each row changes one assumption. Longer bars have more impact: blue favors staying, orange favors leaving.

Year-by-year detail
YearService yrGradeNavy after taxCivilian after taxGap

"After tax" includes BRS matching, employer retirement, health premiums, VA pay, and the costs you entered. The pension is not in these rows; it is counted once in the answer above.

Need more control?

Explore USU service credit, GI Bill transfer, malpractice tail costs, LES upload, and more detailed tax settings in the full model.

Open the advanced labRead the paper
Assumptions and sources

Constant 2026 dollars; year-end cash flows. Navy pay: 2026 basic pay, BAH for the duty ZIP, BAS, FY 2026 incentive pay and four-year retention bonus for the specialty (renewed through 20, one agreement, or none), $8,000 board certification pay, BRS continuation pay if selected. Specialties without their own Navy row use the subspecialty category noted beside them; surgical subspecialties are assumed to be Category I. Civilian pay: Doximity 2026 national averages by specialty. Promotions: O-5 at 15 and O-6 at 21 years after commissioning. BAH and BAS are tax-free.

Taxes: 2026 federal brackets, standard deduction, and Child Tax Credit; Social Security and Medicare; 2026 state wage-tax sample; California disability insurance on civilian pay in California. The pension is taxed at the rate entered.

Pension: 2% (BRS) or 2.5% (Legacy) × 20 years × the average of the last three years of basic pay, paid for the life-table years, discounted at the pension rate. Retiree TRICARE, VA offset or concurrent receipt, and the Survivor Benefit Plan follow the settings above. The answer assumes the stay path reaches 20. After 20, the retiree's civilian pay is reduced by the percentage entered (default 5%) until the work-until age, compared with someone who left earlier. Years still under obligation are not counted, because both paths are in the Navy then.

VA route: leave active duty for a VA staff-physician job until the work-until age, compared with the private job. VA pay (base plus market pay) starts at the private salary capped at the 2026 Tier 1 maximum for the specialty's VA pay table; it counts toward the FERS High-3. VA pay is taxed in the civilian job state without California disability insurance; the VA adds 5% TSP contributions, takes a 4.4% FERS contribution (employees hired after 2013), and covers malpractice under the Federal Tort Claims Act. Health premiums, disability insurance, and VA disability pay are treated as equal on both jobs. FERS pension: 1% (1.1% if leaving at 62 or later with 20 years) × creditable years × High-3, paid at once if leaving at 62, at 60 with 20 years, or at 57 with 30 years, otherwise from 62; at least 5 VA years are required. The buyback deposit is 3% of military basic pay, estimated from the 2026 pay table (slightly high for earlier years), paid in the first VA year. The pension is discounted at the pension rate plus 0.5% a year because FERS cost-of-living raises trail inflation. Not counted: retiree federal health coverage, the FERS supplement before 62, survivor annuities, and VA performance pay.

Sources: DFAS pay tables · VA 2026 physician pay tables · OPM FERS service credit · OPM: market pay in High-3 · BAH · Doximity 2026 · Marit Health · 2026 tax brackets · Treasury real yields · VA rates · Concurrent receipt · KFF 2025 · TRICARE fees · DoD retirement

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