Early Retirement a Good Deal? Not So Much

In an effort to meet the required heavy reduction in forces, Congress has given the DoD the authority to reinstitute Temporary Early Retirement Authority -- better known as "15-year retirement." However, Military.com recently reported that taking the TERA package could mean a loss of hundreds of thousands dollars in retirement benefits. How it Would Work Under the proposed TERA, DoD would factor the retirement rate as follows: 15 (Years of Service) x 2.5 (the traditional retirement factor) x 0.95 (TERA penalty) = 35.625 percent retirement factor. Note that the .95 penalty applies to those who choose to retire with less than 20 years. So a servicemember who chooses to retire with 15 years of service will receive a little more than 35 percent of his or her basic pay over the lifetime of their retirement. This is about 14 percent less than those who get the 50 percent for serving the full 20 years. Past TERA recipients found that taking the option to leave at 15 years initially impacted their eligibility for certain benefits like Concurrent Receipt (CRDP) and Combat Related Special Compensation (CRSC). Thankfully TERA recipients were eventually given eligibility for these benefits, but it was an afterthought. Although the services haven’t started offering early retirements, defense analysts expect the Army and Marine Corps will have to offer TERA to meet the drastic troop reductions required by the 2012 National Defense Act and looming future defense budget cuts. There are several variables to consider when deciding to take the early retirement offer and troops shouldn't dismiss the early retirements out of hand. Servicemembers need to keep these calculations in mind when considering taking the early out. But military personnel benefits experts warned there are more variables to consider and that troops shouldn't dismiss the early retirements out of hand. Read the full article on Military.com