A Present Value Approach to the Retirement Decision.

Abstract

This paper examines the financial side of the decision to retire from active duty. The methodology is one of computing the present values of two possible streams of income. The first stream of income is that received by someone who opts for immediate retirement. The components are immediate retired pay and, presumably, immediate civilian salary. The second possible stream of income is that received by someone who opts to remain on active duty. The components are current military pay, military retirement beginning at a later date, and civilian salary beginning at a later date. This paper presents the methodology for determining the breakeven income--the civilian income which would equate the values of the two alternative streams of income. The principal tool used is present value analysis. The methodology allows for difference in age, expected civilian raises, discount rates, possile capping of retired pay, rank, and years of service. (Author)

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Document Details

Document Type
Technical Report
Publication Date
May 01, 1985
Accession Number
ADA157373

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  • W. J. Walsh

Organizations

  • United States Air Force Academy

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  • C4I

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  • Active Duty
  • Air Force
  • Availability
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  • Computer Programming
  • Economics
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  • United States
  • United States Air Force Academy

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  • Life Cycle Cost Analysis
  • Military Mobilization and Reserve Forces Studies.