As the 110 th Congress begins its second session, ongoing military operations in Iraq and Afghanistan, combined with recruiting challenges and a great deal of interest among military retirees and those working on their behalf will probably continue to highlight military retirement and Concurrent Receipt issues. However, with the recruiting and retention challenges being faced by the military, it is anticipated that military personnel benefits, to include retirement, will continue to be advanced and advocated by the Department of Defense (DOD) and veteran's organizations. It is further anticipated that Concurrent Receipt eligibility will remain an issue for the second session of the 110 th Congress. Congress confronts both constituent concerns and budgetary constraints in considering military retirement issues. The approximately 2.1 million military retirees and survivor benefit recipients, and their roughly 6 million to 8 million family members, have been, and continue to be, an articulate and well-educated constituent group familiar with the legislative process and represented by associations staffed with military retirees who have long experience in working with Congress. In recent years, the long-standing efforts by military retirees and their associations to secure more benefits for their members have been buttressed by (1) the outpouring of nationwide nostalgia and support for the past heroism and current old-age needs of the "greatest generation" of World War II-era veterans, whether retirees or not; (2) concern over problems the military services were having in recruiting and retaining sufficient numbers of qualified personnel, which have been exacerbated by ongoing military operations in Iraq and Afghanistan, and the extent to which actual or perceived inadequacies in retirement benefits may have been contributing to these problems; (3) the impression by many current or former military personnel that the Clinton Administration was not favorably disposed toward the military as an institution, leading to efforts to portray increased retirement benefits as a palliative, and (4) in a reversal of the attitudes toward the Clinton Administration, efforts to obtain more benefits from the Bush Administration because it is perceived as being pro-military. And, since September 11, 2001, there has been a predictably dramatic increase in public and congressional support for the Armed Forces. In addition, it can be posited that the policy choices posed by recently-enacted increased benefits for military retirees are an integral part of a larger debate in the United States over the distribution of pension-type resources among younger workers and older retirees. In the defense context, it may take the form of tensions between DOD and current active duty and reserve military personnel, with the responsibility of defending the United States in the present, and retired military personnel, many of whom feel that they are losing benefits to which they assumed they would always have access. Some assert that rapidly increasing retiree-related benefits, although they reward those whose patriotic service is unquestionable, are "crowding out" defense resources that could go to maintaining and improving current defense capabilities. On the other hand, it can be argued that, in a defense budget of about $550 billion yearly, these benefits are not significant enough to really detract from current defense capability, and that a nearly $14 trillion GDP is more than adequate to finance both benefits for military retirees and current defense requirements if the political will to do so is present. In general, since the late 1990s, Congress has been more aggressive than the executive branch in responding to the stated concerns of retirees about their benefits. DOD and other executive branch agencies have, over time, tended to regard military retirement benefits as a place where substantial budgetary savings could be made. For instance, as noted below, Congress took the initiative in 1999 to repeal the "Redux" cuts in future military retired pay that was originally enacted in 1986, and Congress has enacted major increases in military health care benefits for retirees (TRICARE for Life) and authorized partial concurrent receipt of military retired pay and VA disability compensation, both over DOD objections. In FY2007, total federal budget outlays for military retirement were $43.5 billion and DOD budget outlays were $14.4billion. (The differing figures for total federal and DOD outlays result from the use of the accrual method in accounting for the costs of military retirement. See the section below on Budgeting and Costs for a discussion of accrual accounting. These numbers, taken from Table 2 , also differ slightly from those in Table 1 for purely technical reasons without policy significance.) Table 1 shows the estimated numbers of retirees, and the costs to the federal government of the retired pay they receive, for FY2005-FY2008. Cuts in retired pay for future retirees were enacted in the Military Retirement Reform Act of 1986 ( P.L. 99-348 , July 1, 1986; the "1986 Act," now referred to frequently as the "Redux" military retirement system). Although enactment of Redux in 1986 represented a success for those who argued that the pre-Redux system was too generous, the repeal of compulsory Redux in late 1999 by the FY2000 National Defense Authorization Act indicated that, at least in Congress, those who defend the pre-Redux system were again ascendant. Congress began taking notice publicly of potential problems related to Redux in 1997, well before the executive branch addressed the issue. During the fall of 1998, the Administration announced that it supported Redux repeal. Eventually, the FY2000 National Defense Authorization Act contained provisions for repealing compulsory Redux; it allows post-August 1, 1986 entrants to retire under the pre-Redux system or opt for Redux plus an immediate $30,000 cash payment (see below). A servicemember becomes entitled to retired pay upon completion of 20 years of service, regardless of age. (The average nondisabled enlisted member retiring from an active duty military career in FY2005 was 41 years old and had nearly 22 years of service; the average officer was 45 years old and had nearly 24 years of service.) A member who retires from active duty is paid an immediate monthly annuity based on a percentage of his or her retired pay computation base. For persons who entered military service before September 8, 1980, the retired pay computation base is final monthly basic pay being received at the time of retirement. For those who entered service on or after September 8, 1980, the computation base is the average of the highest three years (36 months) of basic pay. Basic pay comprises approximately 70% of the total for all retirement eligibles: 75% for 30-year retirees and 66% for 20-year retirees. Thus, the 20-year retiree may get 50% of retired pay computation base upon retirement, but only 33% of RMC. The 30-year retiree will receive 75% of the computation base, but only 56% of RMC. Nor do any of these calculations include any of the many special pays, bonuses, or other cash compensation to which many military members are entitled. All military personnel who first entered military service before August 1, 1986, have their retired pay computed at the rate of 2.5% of the retired pay computation base for each year of service. The minimum amount of retired pay to which a member entitled to compute his or her retired pay under this formula is therefore 50% of the retired pay computation base (20 years of service X 2.5%). A 25-year retiree receives 62.5% of the computation base (25 years of service X 2.5%). The maximum, reached at the 30-year mark, is 75% of the computation base (30 years of service X 2.5%). However, the FY2007 National Defense Authorization Act extended the previous pay table to 40 years, allowed additional longevity raises, and provided additional retirement credit for service beyond 30 years at the rate of 2.5% per year. As a result, a servicemember who retires with 40 years of service will qualify for 100% of basic pay in their retirement. Personnel who first enter service on or after August 1, 1986, in accordance with the provisions of the FY2000 National Defense Authorization Act, are required to select one of two options in calculating their retired pay within 180 days of reaching 15 years of service. They can opt to have their retired pay computed in accordance with the pre-Redux formula, described above, but with a slightly modified cost of living adjustment (COLA) formula, which is less generous than that of the pre-Redux formula (see below, under COLAs). They can opt to have their retired pay computed in accordance with the Redux formula and receive an immediate $30,000 cash bonus called a Career Status Bonus (which can actually be paid in several annual installments if the recipient so wishes, for tax purposes). The Redux Formula: Under Age 62 Retirees . Redux is different from the previous formula in two major ways. First, for retirees under age 62, retired pay will be computed at the rate of 2.0% of the retired pay computation base for each year of service through 20, and 3.5% for each year of service from 21-30. Under this new formula, therefore, a 20-year retiree will receive 40% of his or her retired pay computation base upon retirement (20 years of service X 2.0%), and a 25-year retiree will receive 57.5% of the computation base [(20 years of service X 2.0%) + (5 years of service X 3.5%)]. A 30-year retiree, however, will continue to receive 75% of the retired pay computation base [(20 years of service X 2.0%) + (10 years of service X 3.5%)]. The changed formula, therefore, is "skewed" much more sharply in favor of the longer-serving military careerist, theoretically providing an incentive to remain on active duty longer before retiring. The Redux Formula: Retirees 62 and Older .