Here's what the new law will do. We make no changes for those currently at or above age 62. This reform affects only younger military retirees. Right now, any person who has served 20 years can retire —regardless of age. That means a serviceman who enlists at 18 becomes eligible for retirement at 38. The late 30s and early 40s are prime working years, and most of these younger retirees go on to second careers.
All this reform does is make a small adjustment for those younger retirees. If they retire before age 62, the annual increase in their retired pay will be 1% less than the inflation rate. In other words, their benefits will grow every year — just at a slower rate. And when the retiree hits 62, DOD will recalculate the retired pay so that it will be where it would have been if he or she had received the full inflation adjustment every year since he or she retired.
Here's an example: If a serviceman enlisted at 18 and retired at 38, under this policy his lifetime benefit would be about $1.7 million instead of $1.8 million. For a service member who retired at the average military retirement age of 44, the difference would be smaller, about $30,000 over his or her lifetime. This is a far more modest reform than other bipartisan proposals, some of which would have fully eliminated the adjustments for inflation for working-age retirees.
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