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Pensions and intemporal choice: evidence from the U.S. military

dc.contributor.authorCunha, Jesse M.
dc.contributor.authorMenichini, Amilcar A.
dc.dateFebruary 2014
dc.date.accessioned2014-06-13T15:44:01Z
dc.date.available2014-06-13T15:44:01Z
dc.date.issued2014-02
dc.identifier.urihttps://hdl.handle.net/10945/42309
dc.description.abstractWe study a choice made by over 20,000 U.S. military personnel annually between the High-3 and Redux retirement plans. Compared to High-3, Redux offers a $30,000 current lump sum payment in exchange for lower future annuity payments. Despite break-even discount rates between 10% and 25%, about 40% of individuals chose Redux. The likelihood of choosing Redux is decreasing with the break-even discount rate and is related to individual demographics. The implied personal discount rates from this choice are around 9.2%, much lower than found previously. Offering this choice has already saved the government over $2 billion in future retirement payments.en_US
dc.publisherMonterey, California. Naval Postgraduate Schoolen_US
dc.rightsThis publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.en_US
dc.titlePensions and intemporal choice: evidence from the U.S. militaryen_US
dc.typeTechnical Reporten_US
dc.contributor.departmentGraduate School of Business & Public Policy (GSBPP)
dc.subject.authorretirementen_US
dc.subject.authorpensionen_US
dc.subject.authorintertemporal choiceen_US
dc.subject.authormilitaryen_US
dc.identifier.npsreportNPS-GSBPP-14-001
dc.description.distributionstatementApproved for public release; distribution is unlimited.en_US


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