Military retirees' post-service earnings and employment

by Richard V.L. Cooper


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Analysis of military retirees' postservice earnings and employment indicates that retirees fare better than was previously thought. The earnings differential between retirees and comparably aged and educated nonretired veterans is almost entirely due to retirees' working less--a decision that appears to be largely voluntary. In the transition period immediately following retirement, retirees are at a disadvantage in civilian employment, but eventually those who work full-time earn more, on average, than their nonretired counterparts. Retirees serving shorter careers and those in civilian occupations similar to their military occupations fare best in postservice earnings. These findings suggest: (1) the present system should be modified to provide immediate financial help to ease the transition to civilian life, (2) beyond this transition, the present retirement annuity may be larger than is necessary, and (3) more incentives should be provided to serve beyond 20 years.

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