Retirement Choice 2015
Abstract
The Congress is currently considering changes in the military retirement system. As of 2015, however, military personnel who entered service after July 31, 1986 and who are eligible and intend to serve for 20 years must choose between two retirement plans at their 15th year of service.1 Once the final selection is made, the choice is irrevocable unless Congress provides additional retirement options. The two choices are: 1. High-3 retirement plan: Retirement pay is based on the highest average basic pay for 36 months of a servicemember s career. These are usually the last 3 years. 2. REDUX retirement plan plus a $30,000 bonus paid at the 15th year of service: In return for accepting the bonus, REDUX provides smaller retirement checks. How should Marines, Sailors, Airmen, and Soldiers decide which option to take? The Department of Defense (DOD) had a website that provided information and examples to help servicemembers, but it is currently unavailable.2 We have used a different approach that many have found useful in evaluating these retirement choices.3 Here, we update that work for those making the retirement choice in 2015. We start by describing the $30,000 bonus as an early, partial cash-out of the servicemember s retirement pension. This $30,000 cash-out will be paid back later in the form of reduced retirement checks. By providing information on how much this cash-out will cost in terms of lower future retirement income, we hope that we can help servicemembers make more informed choices about which plan to select.
Document Details
- Document Type
- Technical Report
- Publication Date
- Nov 01, 2015
- Accession Number
- ADA626366
Entities
People
- Aline O. Quester
- Anita Hattiangadi
- Lewis G. Lee
- Robert Shuford
Organizations
- Center for Naval Analyses