Thomas McAtee posted on October 01, 2011 15:50
October 2011 - Navy
Now Hear This...
A new plan to overhaul the military retirement system would radically reshape military retirement –– scrapping the 20-year retirement model in favor of a civilian-like system that would pay much less to those who make the military a career, while providing monetary retirement to everyone, no matter how little time they spend in uniform. The detailed proposal by the Defense Business Board shifts money from the 17 percent of service members who actually serve 20 years or more to the 83 percent of overwhelmingly enlisted members who do four, six or eight years and depart military service. Note: Service members already serving would be partially grandfathered under the old system, earning a hybrid of the old benefits and the new, reducing the potential value of their retirement. How will it work? Service members would begin accruing retirement savings immediately, at the predetermined rate of basic pay per year, and would be fully vested in the plan after three-to-five years of service. Like civilian 401(k) accounts, service members would choose how the money is invested and would manage their own funds. Even at lower pay grades, the accrued retirement savings could be significant. For example, an enlisted member who makes it to the E-3 pay-grade and then leaves after four or five years will depart the military with about $20,000 in retirement savings. Properly invested, that might grow to $100,000 or more by age 65.