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
9 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
9 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
9 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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