Military retiree benefits cost the Pentagon $50 billion a year. That's more than next year's entire budget for the Department of Homeland Security. There are 1.9 million military retirees drawing pay and benefits, compared to 1.5 million in the active duty force. In 2010, then-Defense Secretary Robert Gates said those costs are "eating the Defense Department alive."
Bean counters at the Pentagon are working long hours to figure out how to cut close to a trillion dollars from the Department of Defense budget over the next 10 years/…/Part of the defense budget usually protected from budget cuts is personnel costs: mainly health care and retirement benefits. While Defense Secretary Leon Panetta has said everything's on the table, cutting benefits for troops is not an easy sell/…/
"Military retirees who are working age ... for a family plan you pay $460 a year, [and] that covers you and all of your dependents," says Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments in Washington, D.C. "And if you're single, it's $230 a year."
When military retirees reach age 65 and are eligible to go on Medicare, they gets something called TRICARE, a Medicare supplemental insurance plan, Harrison says. It covers everything Medicare doesn't cover. The cost: It's free. In addition to that, retirees also receive pensions. Depending on the rank of the retiree, the pension can be a couple thousand dollars a month or more.
To understand why these benefits are so expensive, you have to think about when military retirees start collecting them. Unlike private sector employees, who don't receive entitlements like Social Security and Medicare until they are 65 years old, military retirees generally begin collecting benefits in their 40s. The average age of officers when they retire is 47, Harrison says. The average age of enlisted soldiers when they retire is 43.
"They're paying retirement benefits to people who are 90 [or] even 100 years old right now, who served a couple of generations ago," he says.