Paul Ryan Budget Cuts Military Benefit FIFTY-SIX Percent

The House of Representatives passed a budget with a big hit to military members that I think will not be overlooked.  It is not a 1% decrease but a 50-55% decrease!

An officer typically graduates from college at age 22 and is commissioned. The earliest retirement could be 20 years later at age 42, earning a retirement paycheck 50% of their basic pay. Under the new proposal, it would be 20 years before they’re age 62 and get the full retirement. Let’s assume COLA each year is 2%, so that’s the first year at 1% and 19 years at 2%, or a total of 47.1% increase at the last year compared to the first. Ryan’s deal would make it 1% less for those 20 years, or 0% for the first year and 1% each of the 19 years, for a total of 20.8% increase at the last year compared to the first year.  That 47.1 to 20.8 cut is throwing away 56% of the enhanced value from the military member during those intervening years!

Although the PR spin tries to say “1% cut is small”, all those 1%’s add up because of compounding. It sounds disingenuous that the congressional federal employees exempted themselves from this cut and selected out only military members to take the cut. The endgame result is that a military member will get less than half of the current amount of retirement increases during the years from retirement to age 62.  For a more normal O-6 retirement after 28 years, commissioned out of college, that would be 12 years after retirement to age 62 instead of 20, so the new law would change a 25.6% increase to a 11.6% increase. Still about half.

This is not a small amount of money and I hope the Senators will see what is happening before they pass their version of the bill.  I think the Representatives did not properly understand the effect of the “little 1%” and therefore they did not properly understand how much backlash will be waiting for them when they return from the Christmas holidays.

BTW, how does this affect Reserve military?  Their pay nominally starts at age 60, but can start 90 days up to years earlier, calculated from accumulated duty performed after January 28th, 2008.