I was surprised about the 20% too...but even more surprised at the enormous costs associated with such a small percentage of retirees that continues to rise. I think this new "retirement" system that pretends to be "fair" to all who serve is really just an attempt to create another pot of money (required TSP contributions) to raid in order to fund the current retirees until they can find another solution. I think they are hoping this new investment strategy lasts long enough to fund and eventually phase out the 20-year annuity retirees so there will no longer be a liability. We are living longer, so it will obviously take decades before that happens. The problem is that I don't see people motivated to stay longer than 10 years...so in the long run, the DoD spends billions of dollars training new recruits to replace the ones who are no longer motivated to stay in past 10 years. Where are the savings? If I were coming into the military today under the new retirement system, I would contribute for 10 years into the TSP, get my free education, free $1M flight training, and transfer my investments to a real 401k when I transition to the airlines. Other than patriotism, give me another reason why I should stay any longer than that?
My question is what other benefits will they offer to keep people in past 10 years in order to continue "funding" the current benefits?Because we are living longer, the retirement benefits currently funded by DoD won't decrease fast enough in series with the proposed defense budget cuts. So, in theory, entitlement spending for DoD will become a larger percentage of the smaller DoD budget. It has to be funded somehow...