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Research Questions

  1. Do members who stay until retirement fare financially better or worse over their entire careers than those who leave before becoming eligible for retirement?
  2. Do military retirement benefits offset any post-service reduction in earnings?
  3. What is the role of pension wealth accumulation in explaining wealth differences between retirees and non-retirees?
  4. Is the well-being and satisfaction of retirees higher or lower than non-retirees?

Retaining quality personnel in the military until retirement requires sufficient compensation during and after service to encourage the completion of a military career, including post-service earnings opportunities and military retirement benefits. The authors assessed the extent to which the earnings, wealth, health, education, and satisfaction of service members who served full careers in the military and retired differed from the earnings and wealth of those who did not serve full careers and those who did not serve at all.

After accounting for the military retirement benefit, military retirees born between 1931 and 1941 typically fared as well as or better than veteran non-retirees and non-veterans in terms of wealth and income. Military retirees also fared better in terms of their level of satisfaction with retirement than the other two groups, and military retirees fared at least as well as non-veterans and veteran non-retirees in terms of educational and health outcomes.

Key Findings

  • Military retirees with less than a bachelor's degree had lower earnings before and after they separated from the military compared with veteran non-retirees or non-veterans.
  • Military retirees with at least a bachelor's degree had broadly similar earnings on average before they separated from the military compared with veteran non-retirees or non-veterans but lower earnings for the ten years after.
  • Military retirement benefits offset the earnings gap for those with less than a bachelor's degree and more than offset the gap for military retirees with at least a bachelor's degree.
  • Following retirement, a smaller fraction of military retirees were employed than veteran non-retirees or non-veterans.
  • Military retirees had accumulated less wealth than non-veterans and veteran non-retirees, excluding pensions and annuities (including military retirement benefits), but these differences were not statistically significant.
  • Accounting for pensions and annuities, military retirees had greater accumulated wealth at ages 55 to 56. But wealth differences relative to veteran non-retirees narrowed at older ages as veteran non-retirees worked longer and became eligible for private pension benefits.
  • Military retirees fared better in terms of their level of satisfaction with retirement, and at least as well in terms of education and health outcomes, than non-veterans and veteran non-retirees.
  • Those who retired at ages 55 to 56 were more likely to report being in good health and having higher expectations of living to age 75.

Table of Contents

  • Chapter One


  • Chapter Two

    Data and Approach

  • Chapter Three

    Comparisons of Demographics, Health, Assets, and Satisfaction

  • Chapter Four

    Comparisons of Employment and Earnings

  • Chapter Five


Research conducted by

The research described in this report was prepared for the Office of the Quadrennial Defense Review, Deputy Chief of Staff, G-8 and conducted by the Personnel, Training, and Health Program within the RAND Arroyo Center.

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