Ryan plan

The Ryan-Murry budget just announced will affect military pensions for retirees between the ages of 40 and 62. There is a lot of controversy swirling around this so I did some calculations. An E-5 (Sergeant) after 20 years of service is earning $3,000 per month. He can retire at 50% of that or $1,500 per month. If he receives a 3% cost of living adjustment each year by the time he is 62 his pension will be $2,872. If the COLA is reduced to 2% he will be earning $2,319 at age 62. This is the proposal in the Ryan-Murry budget agreement. At age 62 this person’s pension will be adjusted to recapture the money lost in the years between 40 and 62. This is the worst case scenario. An average person would be 51 and have only 11 years until age 62. In that case his pension would increase from $1,500 to $2,076 with a 3% COLA and $1,865 with a 2% COLA. Once again at age 62 the pension would be adjusted to recapture the lost money between the ages of 50 and 62. The COLA for this year is 1.5% and will be reduced to 0.5%. This means that the 40 year old who retired after 20 years will have his pension increase from $1,500 to $1,867 by age 62 but with the one percent reduction he would end up with $1,674.