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Which System
Final Pay
Retirement Choice
The Choice
Comparing Options
Typical Situations
O-5 with 20 years
O-5 with 24 years
O-6 with 30 years
W-3 with 22 years
E-7 with 20 years
E-8 with 24 years
E-9 with 30 years

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Typical Situations

O-5 Retiring at 24 Years of Service

This first chart depicts the estimated gross monthly retired payments under both retirement options. Taxes and participation in the SBP are not considered. The REDUX jump reflects the cost-of-living catch up adjustment and multiplier re-adjustment at age 62. In comparing your options, focus on the differences on the level of retired pay. You need to determine whether your $30,000 CSB at the 15th year will make up for these reductions.

Graph showing gross monthly retired pay of an O-5 Retiring at 24 Years of Service

In the following chart, the amounts shown are the accumulation of after-tax savings from electing the $30,000 CSB at year 15 compared to the accumulation from saving the after-tax difference in the High-3 retired pay over the REDUX retired pay. In this case, the savings of extra retired pay in the High-3 option surpasses the accumulated savings from the CSB when the member is 56. This cross-over would be delayed or eliminated if the after tax earnings from the mutual fund/savings were much higher than 8 percent.

Graph showing accumulated savings of an O-5 Retiring at 24 Years of Service

These results will vary depending on your choices and the assumptions. The above example is only a simple comparison of the essential differences between electing CSB/REDUX or accepting High-3. See the Considerations section for a more in-depth discussion on factors that will affect the results depicted.


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