Experts Warn New Retirement System Has Major Flaw

"...Top financial experts are worried about a key piece of the military's new blended retirement system and are urging the Pentagon not to shortchange career troops — especially enlisted service members.

Specifically, the American Academy of Actuaries is scrutinizing the new system's lump-sum payout option and precisely how the Pentagon will calculate it for those who elect to cash such a large portion of their pension.

Military retirement reform became law last year and takes effect in 2018, giving future retirees the option of taking traditional monthly pension checks or accepting smaller monthly pay along with a lump-sum cash payment at the time of separation. The lump sum would total either 50 percent or 25 percent of a service member's promised pension benefits.

It’s similar to the military's longstanding "REDUX" retirement option, which..."

Read more at Military Times

REDUX Retirement Rejected by Today's Troops

"...Even as Washington policymakers begin to ponder a new, far-reaching proposal to redefine the military retirement system, a previous overhaul of the benefit is dying a slow death.

It's been 15 years since service members were first given the choice of taking a $30,000 lump-sum cash payment in exchange for accepting a lower retirement pension for the rest of their life under the so-called REDUX retirement option.

It was popular initially. As recently as 2003, almost half of the troops eligible to take the REDUX option did so, accepting that cash bonus — along with lifetime monthly retirement checks worth about 20 percent less than under traditional retirement..."

Read more at militarytimes.com

REDUX / High-3 Comparison

"...The following fictitious story, about twin brothers Harry and Richard, shows the differences between the High-3 and CSB/REDUX retirement systems, the potential worth of the Career Status Bonus and insight of the lifetime value of the two retirement options. How this story plays out for you depends upon your personal situation and assumptions about your career and the economy. A planning calculator is available on this website for you to make some comparisons of your own..."

Read more at militarypay.defense.gov