News Release

November 17, 2015

For Immediate Release
Contact: David Vordick, VP & CIO, (703) 824-2015

CNA Releases 2015 Retirement Choice Report and Updated Calculator

Arlington, VA Today CNA released an updated version of its web-based calculator that allows military servicemembers to determine which Department of Defense retirement plan will best serve their needs—a decision that could cost them hundreds of thousands of dollars in retirement benefits.

The calculator, developed by CNA as part of its annual Retirement Choice study, allows future retirees to determine how much they would earn under two competing retirement plans and decide which one is right for them. The two plans affect servicemembers who joined the military after July 31, 1986. Members must choose between the High-3 plan, which bases retirement pay on the highest average basic pay for three years of their careers, or the REDUX plan, which provides a $30,000 upfront career status bonus with smaller retirement checks over time.

To use the calculator, servicemembers type in the year they entered military service, the number of years they will have served when they retire, their tax rate, their paygrade at retirement, and their anticipated life expectancy. The calculator then generates an estimate of which plan will best meet their financial needs.

As reported in the conclusion of CNA’s latest retirement study report, Retirement Choice: 2015:

We find that, for almost all servicemembers, the REDUX retirement plan plus a $30,000 bonus paid at the 15th year of service is a bad choice that significantly reduces their retirement income. The higher the grade, the lower the years of service at retirement, and the longer the servicemember lives, the greater the reduction. Moreover, as each year passes, the difference between REDUX and High-3 retirement income increases.

Thinking of the $30,000 bonus as a “loan,” this is a loan that is paid back (through lower retirement income) at extremely high interest rates. Even if servicemembers invest the bonus, the required interest rates make it virtually impossible for them to break even.

"The REDUX bonus effectively amounts to an early, partial cash-out of a servicemember's retirement plan, which translates into less future retirement income," said Anita Hattiangadi, research team leader for CNA’s Resource Analysis Division’s Marine Corps Manpower Team and one of  the report’s authors. "The bonus may seem appealing but it’s important to understand the cost of that short-term gain in terms of lost long-term benefits."

CNA’s Resource Analysis Division also focuses on such issues as infrastructure and readiness, cost and acquisition, workforce training and education, and energy and the environment.

CNA is a nonprofit research and analysis organization dedicated to the safety and security of the nation. It operates the Center for Naval Analyses — the only Federally Funded Research and Development Center (FFRDC) serving the Department of the Navy — as well as the Institute for Public Research. CNA is dedicated to developing actionable solutions to complex problems of national importance. With nearly 700 scientists, analysts and professional staff, CNA takes a real-world approach to gathering data. Its one-of-a-kind field program places analysts on carriers and military bases, in squad rooms and crisis centers, working side-by-side with operators and decision-makers around the world. CNA supports naval operations, fleet readiness and great power competition. Its non-defense research portfolio includes criminal justice, homeland security and data management.

Note to writers and editors: CNA is not an acronym and is correctly referenced as "CNA, a research organization in Arlington, VA."


Elizabeth Cutler
Communications Program Manager

Liza Cordeiro
Senior Advisor Marketing