	Overview

The military retirement system is a government-funded benefit system that has been viewed historically as a significant incentive in retaining a career military force. The defined benefit includes a monthly annuity for qualified active and reserve retirees paid out of the Military Retirement Fund. The amount of the retirement annuity depends on time served and basic pay at retirement. Military retirees are also entitled to nonmonetary benefits, which include exchange and commissary privileges, medical care through TRICARE, and access to Morale, Welfare and Recreation facilities and programs. For reserve component personnel, the system is based on points , and reservists do not generally begin to receive retired pay until the age of 60. In FY2017, approximately $53.5 billion was paid to approximately 2 million military retirees, and an additional $3.9 billion was paid to 319,431 survivors. In the past, some have viewed military retirement as a place where substantial savings could be made, arguing that the military retirement compensation is overly generous relative to pension systems in the civilian sector. In addition, some have argued that past modifications to the system intended to save money have had a deleterious effect on military recruiting and retention, particularly in times of strong economic performance. While congressionally mandated changes to the military retirement system have been infrequent, any potential changes are closely monitored by current servicemembers, retirees, survivors and the veterans' service organizations that support them. Some disability retirees are retired before becoming eligible for longevity retirement, while others have completed 20 or more years of service. A defined benefit plan similar to the current High Three system that would vest personnel at 10 years of service, with benefits to begin either at age 60 (for personnel who have served less than 20 years of service) or age 57 (for those that served more than 20 years of service). 112-239 mandated that the commission comply with conditions that would grandfather existing servicemembers and retirees into the existing retirement system, stating:
(i) For members of the uniformed services as of such date, who became members before the enactment of such an Act, the monthly amount of their retired pay may not be less than they would have received under the current military compensation and retirement system, nor may the date at which they are eligible to receive their military retired pay be adjusted to the financial detriment of the member.
The military retirement system is a government-funded, noncontributory, defined benefit system that has historically been viewed as a significant incentive in retaining a career military force. The system currently includes monthly compensation for qualified active and reserve retirees, disability benefits for those deemed medically unfit to serve, and a survivor annuity program for the eligible survivors of deceased retirees. The amount of compensation is dependent on time served, basic pay at retirement, and annual Cost-of-Living-Adjustments (COLAs). Military retirees are also entitled to nonmonetary benefits including exchange and commissary privileges, medical care through TRICARE, and access to Morale, Welfare and Recreation (MWR) facilities and programs.
Currently, there are three general categories of military retiree, active component, reserve component, and disability retiree. Active component personnel are eligible for retirement (i.e., vested) after completing 20 years of service (YOS). Reserve personnel are eligible after 20 years of creditable service based on a points system, but do not typically begin to draw retirement pay until age 60. Finally, those with a disability retirement do not need to have served 20 years to be eligible for retired pay; however, they must have been found unqualified for further service due to a permanent, stable disability.
In FY2017, approximately $57 billion was paid to 2.3 million military retirees and survivors. Given the size of the program, some have viewed military retirement as a place where substantial budgetary savings could be made. Others have argued that past modifications intended to save money have had a deleterious effect on military recruiting and retention. Military retirees, families, and veterans' service organizations closely monitor potential changes to the retirement system. When considering alternatives to the current system, Congress may choose to consider the balance among the benefits of the military retirement system as a retention incentive, budget constraints, and the needs and concerns of their constituents.