Early retirement may cost servicemembers thousands in benefits


As the Armed Forces looks for ways to reduce troop levels, one option is for servicemembers to accept a 15-year retirement incentive. The move would allow soldiers to retire five years before the traditional 20-year mark, but experts say it could cost them thousands of dollars in payments, Military.com reports.

There's no word whether or not any of the branches will offer the choice after they were given Temporary Early Retirement Authority by Congress, but it has not been ruled out. In particular, the Army and the Marine Corps are likely going to have to make the biggest cuts in troops.

Anybody who accepts early retirement may be doing so at their own peril. Those who make it to 20 years receive 50 percent of their pay after leaving, but anybody who retires early has to subtract 3.5 percent for every year before the 20 year mark. As a result, 15-year retirement results in 32.5 percent of pay.

Though it might seem like a bad deal, experts say that there are certain circumstances that might lead servicemembers to accept early retirement. According to the website, early retirement still offers full medical benefits and it could be a good way for soldiers to spend more time with their family. Additionally, if enough people don't voluntarily leave the service it could put the military in a bind.

"If the services can't find enough who voluntarily leave, they are going to have to force some out," retired Col. Mike Hayden told the website.

According to The New York Times, the Army is expected to cut about 80,000 troops. The branch currently has about 570,000 soldiers and Defense Secretary Leon Panetta has said that he hopes to cut it to about 490,000. The strategy is part of a larger goal of slimming down the Armed Forces.

With such uncertainty surrounding not only troop levels but also military benefits, it may be wise for soldiers to look to AFBA's Select Term life insurance policies. Coverage can be tailored to fit each recipient's unique situation and it stays with them even if they change employers or separate from military service.


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