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.
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-36 (High
Three Pay) retired pay over the REDUX retired pay. In this case, the accumulated savings from the CSB exceeds the savings of extra retired pay in the High-36 option.
This effect occurs because 1) this member has 15 years of earnings accumulated from the CSB before beginning to save the difference between the High-36 and REDUX retirement pay, and 2) as the member served a 30-year career, the retirement multiplier is equal for REDUX and High-36 (and, therefore, the retired pay only differs by the Cost of Living Adjustment). This result would vary depending on the rates of return for the CSB savings. Remember in all these cases we assumed a return of 8 percent.
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-36. See the Considerations section for a more in-depth discussion on factors that will affect the results depicted.