Pensions and Intertemporal Choice: Evidence from the U.S. Military
Cunha, Jesse M.
Menichini, Amilcar A.
MetadataShow full item record
We 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.
Showing items related by title, author, creator and subject.
The relationship between academic major at the United States Naval Academy and Service Community Selection Arcement, Brian K. (Monterey, California. Naval Postgraduate School, 1998-08);This study provides information for those individuals responsible for guiding midshipmen's choice of naval service community. This research focused on individuals who received their first community choice. The analysis ...
Kimeldorf, George; Sampson, Allan R.; Whitaker, Lyn R. (1992-03);To analyze two-sample ordinal data, one must often assign some increasing numerical scores to the ordinal categories. The choice of appropriate scores in these types of analyses is often problematic. This article presents ...
Rigoni, Michael P.; Correia de Souza, Wagner (Monterey, California: Naval Postgraduate School, 2016-06);In 2013, the Department of Defense (DOD) implemented an accuracy metric to monitor how well the services and Defense Logistics Agency were forecasting demand for inventory items. After three years, results were still poor. ...