RAND Study Proposes New Military Retirement Option

This retirement reform proposal is better than others I have seen,but people should not be fooled into thinking this is in any way a good deal:

A proposal that would transform the military retirement system by promising smaller monthly checks but also giving troops a lump sum “transition pay” immediately upon retirement could turn out to be very popular among most service members, according to a new study.

The study published Wednesday by the RAND Corp. think tank looked in detail for the first time at how today’s 1.4 million active-duty troops might respond to a sweeping overhaul of the traditional military retirement system.
The results suggest that many troops, given a choice, would prefer to take an end-of-career payout, probably amounting to about 2½ years of their annual basic pay, in exchange for smaller monthly checks during their so-called “working-age retirement” years before age 65. (Army Times)

You can read more at the link but I would advise every troop against doing this but I could see some taking this option to pay bills or pay off a mortgage before retirement. What I like most about this bad deal is that it is voluntary and troops are not forced to take it.

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Leon Laporte
10 years ago

“The results suggest that many troops, given a choice, would prefer to take an end-of-career payout”

They are counting on short sighted suckers being born every minute.

guitard
guitard
10 years ago

Isn’t there already something like this available? Seven or eight years ago I worked with an E-8 who opted to receive a payment (I think it was $30K) at 15 years of service that reduced his retirement by XX percent. Obviously, he also had to agree to stick around for another five years to reach retirement. I thought it was a terrible idea, but he said he had some serious debt that he wanted to pay off sooner rather than later.

blingslade
10 years ago

Guitard, What you’re referring to is the Military REDUX Retirement plan. And you’re right, a servicemember can elect to take a 30K payment at 15 years and their retirement at 20 years will be reduced to 40% + 3.5% each year thereafter up to 75%. They’d also get a reduced retirement COLA -1% of the CPI.

Doesn’t sound like such a great deal when probably 10K of the 30K would go to taxes, unless you’re overseas in one of those tax free zones.

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