Abstract
The military retirement system provides an immediate, lifetime, inflation-protected annuity to personnel who complete 20 or more years of service. The cost of this system has risen substantially in the past 15 years, and the system's actuarial costs now comprise almost one-third of total military manpower costs. Because of its importance in the total military compensation system, the military retirement system exerts a significant influence on the age structure of the force and on personnel turnover patterns. This article evaluates the relative efficiency of the current retirement system by comparing it with two recently proposed alternatives, one by a presidential commission and one by the Department of Defense. It estimates the impact of these proposed alternatives on the military personnel force structure and on manpower costs. It is concluded that these alternatives would provide a force as capable as today's force at significantly lower cost.
Similar content being viewed by others
References
Albrecht, Mark J. (1979). “Labor Substitution in the Military Environment: Implications for Enlisted Force Management.” The Rand Corporation, Santa Monica, CA, November.
Cooper, Richard V. L. (1980). “Military Retirees' Post-Service Earnings and Employment.” R-2493-MRAL, The Rand Corporation, Santa Monica, CA, March.
Danzinger, Sheldon, Robert Haveman, and Robert Plotnick (1980). “How income transfers affect work, savings, and the income distribution,” The Journal of Economic Literature, 19 (September): 975–1028.
Enns, John H. (1977). “Reenlistment Bonuses: Their Effect on First-Term Retention.” R-1935-ARPA, The Rand Corporation, Santa Monica, CA, September.
Final Report of the President's Commission on Military Compensation (1978). U.S. Government Printing Office, April.
Gilman, Harry J. (1976). “Determinants of Implicit Discount Rates.” Unpublished manuscript, The Center for Naval Analyses, Alexandria, VA, September.
Gotz, Glenn, and John J. McCall (1977). “The Retirement Decision: An Analysis of A Dynamic Retirement Model.” WN-9628-AF, The Rand Corporation, Santa Monica, CA, March.
Gotz, Glenn, and John J. McCall (1980). “Estimating Military Personnel Retention Rates: Theory and Empirical Method.” R-2541-AF, The Rand Corporation, Santa Monica, CA, June.
Grubert, Harry and Rodney Weiher (1970). “Navy Reenlistments: The Role of Pay and Draft Pressure,” in Studies Prepared for The President's Commission on an All-Volunteer Armed Force, U.S. Government Printing Office, November.
Kleinman, Samuel and William F. Shugart (1974). “The Effects of Reenlistment Bonuses.” CRC 269, The Center for Naval Analyses, Alexandria, Va., September.
Marcus, A. J. (1982). “Personnel Substitution and Navy Aviation Readiness.” PP 363, The Center for Naval Analyses, Alexandria, Va., October.
Nelson, Gary R. (1970). “Economic Analysis of First-Term Reenlistments in the Army,” in Studies Prepared for the President's Commission on an All-Volunteer Armed Force, U.S. Government Printing Office, November.
Rice, Donald B. (1979). Defense Resource Management Study: Final Report, Washington, D.C.: OASD(MRA&L), February.
Warner, John T. and Bruce Simon (1979). “An Empirical Analysis of Pay and Navy Enlisted Retention in the AVF.” (CNA) 79–1878, The Center for Naval Analyses, Alexandria, VA, December.
Warner, John T. (1981). “Military Compensation and Retention: An Analysis of Alternative Models and a Simulation of a New Model.” Research Contribution 436, The Center for Naval Analyses, Alexandria, VA, March.
Warner, John T. and Matthew S. Goldberg (1981). “The Influence of Non-Pecuniary Factors on Labor Supply: The Case of Navy Enlisted Personnel.” PP 337, The Center For Naval Analyses, Alexandria, Va., December.
Wilburn, Robert C. (1970). “The Impact of Income, the Draft, and Other Factors on Retention of Air Force Enlisted Men,” in Studies Prepared for the President's Commission on an All-Volunteer Armed Force, U.S. Government Printing Office, November.
Author information
Authors and Affiliations
Additional information
Order of authorship determined alphabetically. This paper presents results of analysis conducted while Enns and Nelson were associated with the Department of Defense and Warner was on the staff at the Center for Naval Analyses. The views presented herein are those of the authors.
Rights and permissions
About this article
Cite this article
Enns, J.H., Nelson, G.R. & Warner, J.T. Retention and retirement: The case of the U.S. military. Policy Sci 17, 101–121 (1984). https://doi.org/10.1007/BF00146923
Issue Date:
DOI: https://doi.org/10.1007/BF00146923