Redux plan was created and operates in accordance with Military Reform Act of 1986 and is available for those individuals that joined the US army after August 1, 1986. There is a special type of military retirement calculator that is used for calculating the retirement details for this plan. CBS / Redux was designed with the particular function: to save the money for government when paying pensions to the retirees, whose number is increasing rapidly for the last decade.
How does CSB/Redux Retirement Plan works? Those individuals that choose CSB / Redux retirement plan are given Career Status Bonus that currently amounts to $30,000. In exchange for this bonus retirees receive decreased pension than they would have received under High-3 Year Average retirement plan. To say in other words, the government gives you some money in advance under than condition that you will accept reduced pension in the future.
Besides lower pension under CSB / Redux plan retirees also make Cost of Living Adjustment under lower rate than High-3 Years Average retirement plan participants do that makes CSB / Redux. Cost of Living Adjustment (COLA) is adjusting pension against inflation. Military retirement calculator for Redux plan uses lower rate for Redux plan than for High-3 Year Average plan. Under High-3 Year Average plan one’s pension is adjusted by Consumer Price Index (CPI) that is the same as inflation rate. Things are different for those guys, who use CSB / Redux plan. Their pension is adjusted by CPI-1% or inflation rate-1%. For instance, if inflation rate for year 2009 is 5%, the pension is increased only by 4% that means that year 2009’s pension has 1% less purchasing power than it had in 2008. On the contrary for High-3 Year Average retirement plan participants if year 2009’s inflation is 5% the pension is increased by 5% that means that year 2009’s pension has the same purchasing power as it had in 2008.
To summarize, military retirement calculator for CSB /Redux plan has following features/variables:
- $30,000 Career Status Bonus given to retirees at the day of retirement;
- At 20 years of service a pension that equals to 40% of the base pay and 3.5% increase for every additional year;
- The maximum pension is 75% of the base pay for 30 years of the service (in some cases some individuals are allowed to retire at 100% of the base pay after 40 years of service due to some special factors);
- Cost of Living Adjustment (COLA) is CPI-1 (Inflation Rate -1);
The question that always arises: which plan is better High-3 Year Average or CSB / Redux? For 30 years of service the pension rate is the same – 75%, but COLA adjustment for Redux plan is still lower, but at the same time you receive $30,000 at the day of retirement. In this case for 30 year retirees the CSB /Redux plan must be better.
But what if you are retiring after 20 years of service? In this case what you need is good calculation. This is where you need military retirement calculator for both Redux and High-3 Year Average plans. You need to check the ultimate yields from both plans in this case.