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A Pension Before Age 40: Are Military Benefits Too Rich? In recent years, countries including the U.K., Poland, Ireland and Sweden have raised the age of eligibility for military pensions. The U.S., on the other hand, is sticking with the status quo—and at a time of strained budgets, that’s a potentially costly problem. The military retirement system permits members of the armed forces who serve full time for at least 20 years to retire as early as age 37 with a defined-benefit pension. On Jan. 29, the Military Compensation and Retirement Modernization Commission released a report that recommends no changes to the benefit-eligibility requirements for the military’s pension plan, though it did recommend some significant changes in its structure. John Turner and Bruce Klein, economists at the Pension Policy Center in Washington D.C. who weren’t involved in the commission effort, subsequently released their own report, arguing that the military needs to “modernize” its pension system. Their principal recommendation: to raise the eligibility age for benefits. The Turner/Klein report is full of detail about how the U.S. compares to many of its NATO allies. On average, the report says, “the eligibility age for U.S. military pensions is lower by 15 years compared to the United Kingdom, and by 20 years compared to some other NATO countries.” Moreover, it adds, the eligibility age hasn’t been changed in nearly 70 years—a period during which life expectancy has increased dramatically. The upshot? “With current life expectancies, U.S. military personnel on average can expect to receive a pension for more than twice as many years as they served in the military.” In 2012, the U.S. spent $52.9 billion on military retirement benefits, versus $57.5 billion on pay for active military personnel, Messrs.Turner and Klein say. The unfunded liability for military pensions: $934 billion in 2012. According to current rules, enlisted men and women who join the military at the youngest age possible, 17, can begin collecting benefits as young as 37. For officers, who are required to have a college degree, the earliest age to collect benefits is typically 41 or 42, the report notes. The longer you serve, the more generous the benefit: Someone who serves for 40 years will receive 100% of final pay.

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