Redux military retirement plan that is also known as Career Status Bonus originates and is regulated based on Military Reform Act of 1986 and is assigned to individuals that started military service at the US Army after August 1, 1986. Redux retirement plan requires special military retirement calculator for calculating the details of the retirement under Redux / Career Status Bonus military retirement plan.
Career Status Bonus / Redux plan was particularly designed to save money to the government. Since number of US Army’s military retirees increases every year, government finds it more and more difficult to cover current payments associated with military pensions. The Redux plan was created to make these payment easier.
Redux / Career Status Bonus military retirement plan works in the following way. The individuals that joined the US Army after August 1, 1986 are offered to choose among High 3 Year Average and Redux / Career Status Bonus as they reach certain point in their career. Those who choose Redux / Career Status Bonus are entitled to receive Career Status Bonus that is currently $30,000 immediately as they retire. But at the same time these individuals also receive lower salaries than they would have received, if they chose High 3 Year Average plan instead of Redux / Career Status Bonus. So in other words, the government buys you out and gives you large sum to ensure that you receive much lowered pension in the future.
One more thing that makes Career Status Bonus / Redux different from High 3 Year Average is the way how an individual’s
pension is adjusted towards the adverse effects of inflation. This is also known as Cost of Living Adjustment (COLA).
In case of Redux / Career Status Bonus a military retirement calculator makes an adjustment against inflation is made by CPI (Consumer Price Index) minus 1% (CPI-1%). CPI is common measure of inflation, so we can say that pension under Redux retirement plan is adjusted by (Inflation Rate – 1%). This is bad, because inflation depletes pension’s purchasing power over time.
In case of High 3 Year Average military retirement plan military retirement calculator makes an adjustment to the pensions by CPI directly that means that adverse effect of inflation is fully accounted for, so the purchasing power of the military pension stays the same over time.
For instance, if the inflation rate for year 2009 was 5%, then pensions under High 3 Year Average military retirement plan would be adjusted by 5%, while under Redux / Career Status Bonus they would be adjusted by 4% (CPI-1%)
The retirement is one of the most important decisions that a person has to make in his / her life. On the other hand, military retirement calculator is absolutely necessary to make informed and wise decision.