The military retirement system is a government-funded benefit system that has been viewed historically as a significant incentive in retaining a career military force. The system includes a defined benefit (i.e., pension) element for all retirees and a defined contribution element for certain eligible retirees. The defined benefit includes a monthly annuity for qualified active and reserve retirees paid out of the Military Retirement Fund. The defined contribution benefit includes government-matching payments into an individual retirement Thrift Savings Plan (TSP) account. The amount of the retirement annuity depends on time served and basic pay at retirement. It is adjusted annually by a Cost-of-Living Adjustment (COLA) to ensure that the annuity is protected from the adverse consequences of inflation. Military retirees are also entitled to nonmonetary benefits, which include exchange and commissary privileges, medical care through TRICARE, and access to Morale, Welfare and Recreation facilities and programs. The non-disability military retirement system has evolved since the late 1800s to meet four main goals. To keep the military forces of the United States young and vigorous and ensure promotion opportunities for younger members. To enable the armed forces to remain competitive with private-sector employers and the federal Civil Service. To provide a reserve pool of experienced military manpower that can be called upon in time of war or national emergency to augment active forces. To provide economic security for former members of the armed forces during their old age. Among active duty personnel, eligibility for a monthly pension is generally based on a service requirement of at least 20 years of (active) service. For reserve component personnel, the system is based on points , and reservists do not generally begin to receive retired pay until the age of 60. Both the active duty and reserve component retirement systems vest at 20 years of qualifying service. However, some members who are retired with a physical disability may receive a pension regardless of the amount of time they have spent on active duty. Disability retirement offers a choice between two retirement compensation options: one based on years of service (longevity) and one on the severity of the disability. In FY2017, approximately $53.5 billion was paid to approximately 2 million military retirees, and an additional $3.9 billion was paid to 319,431 survivors. As shown in Table 1 , the number of military retirees and the cost of their retirement benefits have increased over the past decade. Congress grapples with constituent concerns as well as budgetary constraints in considering military retirement issues. In the past, some have viewed military retirement as a place where substantial savings could be made, arguing that the military retirement compensation is overly generous relative to pension systems in the civilian sector. In particular, they note that active duty military personnel become eligible for retirement at a relatively young age. In FY2017, the average active duty non-disability enlisted retiree is 42 years old and has 21 years of service at retirement; the average officer is 46 years old and has about 23 years of service at retirement. Others argue that the military retirement system is fair given the unique demands of military service, pointing out the high operational tempo and repetitive tours of duty in overseas combat areas that servicemembers have endured over the past 15 years. In addition, some have argued that past modifications to the system intended to save money have had a deleterious effect on military recruiting and retention, particularly in times of strong economic performance. While congressionally mandated changes to the military retirement system have been infrequent, any potential changes are closely monitored by current servicemembers, retirees, survivors and the veterans' service organizations that support them. There are currently three separate but related retirement systems within the DOD: one for active duty members, one for reservists, and one for those who become medically disabled and are unable to complete a 20-year military career due to their disability. Each of these systems has distinct eligibility requirements and formulas for calculating the retirement annuity. Retirement pay calculations are based on the date when the servicemember first entered active duty and their pay base at the time of retirement. The defined benefit portion of the active and reserve component retirement systems cliff-vest s after 20 years of service. This means servicemembers who leave the service prior to completing 20 years of eligible service typically will not receive any non-disability retirement benefit. This contrasts with eligibility for disabled veterans, who are vested on their disability retirement date regardless of years of service. For active duty military personnel, there are four methods of calculating retired pay based on longevity: the Final Basic Pay System, "High Three," Redux, and the Blended Retirement System (BRS) (see Table 4 for a comparison of the benefits under each method). The applicable retirement calculation is based on the date when the servicemember first entered active duty, their pay base at the time of retirement, their years of service, and whether they chose the Redux system or the BRS (if eligible). Figure 1 shows how eligibility for retirement calculations is determined. For persons who entered military service before September 8, 1980, the pay base is the final monthly basic pay received by the servicemember at the time of retirement multiplied by 2.5% for each year of service. The minimum amount of retired pay to which a member is entitled under this formula is therefore 50% of the retired pay computation base (20 years of service times 2.5%). For example, a servicemember who retires at 25 years receives 62.5% of the computation base (25 years of service times 2.5%). The Final Basic Pay cohort that entered the military before September 8, 1980, had 30 years of service in 2010. It was expected that all members of this group would be retired by 2016. Those who entered service on or after September 8, 1980, and before January 1, 2018, are eligible to elect the High Three system. For this system the computation base is the average of the highest 3 years (36 months) of basic pay rather than the final basic pay. Otherwise, calculations are the same as under the Final Basic Pay method. The Redux military retirement system was initiated with the Military Retirement Reform Act of 1986 ( P.L. 99-348 ). The Redux formula reduced the amount of retired pay for which military servicemembers who entered the armed forces on or after August 1, 1986, were eligible. This system was broadly unpopular and by 1997 Congress began to take note of potential recruiting and retention problems associated with the change. In 1998, the Clinton Administration announced that it supported Redux repeal. The National Defense Authorization Act for Fiscal Year 2000 ( P.L. 106-65 §§641 and 642) repealed compulsory Redux. It allowed post-August 1, 1986, entrants to retire under the High Three system or opt for Redux plus an immediate $30,000 cash payment. The FY2016 NDAA, enacted on November 25, 2015, terminated the Redux option. Those who entered the service during the time when Redux was an option were required to select one of the following two options for calculating their retired pay within 180 days of reaching 15 years of service. Eligible servicemembers can opt to have their retired pay computed in accordance with the pre-Redux formula, described above as High Three. Eligible servicemembers 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. Those who select the Career Status Bonus (CSB) must remain on active duty until they complete 20 years of service or forfeit a portion of the bonus. In the FY2016 NDAA, based on recommendations from the Military Compensation and Retirement Modernization Commission (MCRMC), Congress adopted a new retirement system, shifting from a purely defined benefit system to a blended defined benefit plus defined contribution system. Servicemembers with 12 or fewer years of service as of December 31, 2017, were afforded an opportunity to choose the BRS. The BRS is mandatory for individuals who entered the service on or after January 1, 2018. For these servicemembers, the computation base for the defined benefit will be the average of the highest three years (36 months) of basic pay, as in the High Three System; however, the multiplier is reduced to 2.0 from 2.5. This means that the pay base is the high three average at the time of retirement multiplied by 2.0% for each year of service. Therefore a servicemember retiring at 20 years would receive 40% of his or her pay base under the new formula and a 30-year retiree would receive 60% of his or her pay base. The Blended Retirement System also allows servicemembers to receive a portion of their retired pay in a lump sum. An individual entitled to retired pay may, no later than 90 days before the date of retirement, elect to receive A lump sum payment of the discounted present value at the time of the election of an amount of the covered retired pay that the eligible person is otherwise entitled to receive for the period beginning on the date of retirement and the date the eligible person attains the eligible person's retirement age. For those who elect to receive a lump sum payment, after reaching the eligibility age for social security (usually 67), they will again receive 100% of their regular monthly annuity, which will be adjusted for annual cost of living increases. The law also allows retirees to take their lump sum payment as a single payment or up to four annual installments. The lump sum is discounted to the present value based on the annual rate published by DOD in June of each year and which goes into effect on January 1 of the following year. Lump sum payments are considered earned income and are taxed accordingly. Members under the BRS with a disability retirement do not have the option of receiving a portion of retired pay as a discounted lump sum.