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Congress debating retirement benefits

First Posted: 1:49 am - January 16th, 2016

By Thomas Crisp - Contributing Columnist



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Congress has been debating changes to the types of retirement benefits that veterans receive, including a switch to a corporate 401(k)-style plan.

According to researchers, however, reforms should consider the economic and health realities of veterans approaching retirement now.

Alan Gustman and Nahid Tabatabai of Dartmouth, along with Thomas Steinmeier of Texas Tech, broke down the economic and health outcomes for veterans age 51 to 56 in 1992, 1998, 2004, and 2010, measuring how the government’s services have helped over time.

The study said:

• Among those 51 to 56 in 1992, veterans were better educated, healthier, wealthier, and more likely to be working than non-veterans (https://www.nber.org/papers/w21736).

• By the 2010 cohort, 51- to 56-year-old veterans had lost their educational advantage over non-veterans, were less healthy, less wealthy and less likely to be working.”

Using data from the “Health and Retirement Study,” the researchers tracked outcomes, adjusting for rank, years of service, and a variety of other factors. The findings were limited to male veterans, because female veterans in the data did not have a large enough sample to be reliable.

In terms of service, the researchers pointed out that only the 2010 cohort had been a part of the All-Volunteer Military, instead of the Korean and Vietnam War drafts of the earlier cohorts.

This meant that a much lower number of the total population served (16 percent of the total male population in 2010 versus 50 percent in 1992) and a higher percent serving more than 10 years (13 percent in 2010 versus 8 percent in 1992). In the outcomes for veterans over the age groups, a number of trends appear.

Education, health outcomes

In terms of education, the mean number of years in school has stayed the same for veterans (13.2 in 1992 to 13.4 in 2010), while the years for non-veterans has caught up (12.2 to 13.5).

The percentage of veterans going to some college has also stayed fairly consistent (51 percent to 57 percent, with a peak in 2004 at 67 percent), while non-vets have again caught up (39 percent to 58 percent, with a peak in 2004 at 65 percent). While non-veterans have caught up in education, they have lapped veterans in many other categories.

The percent of veterans who saw combat is the same between the 1992 and 2010 cohorts (18 percent), and leaped up for the 1998 and 2004 cohorts (34 percent and 33 percent, respectively), but the percentage of veterans on disability or with a health problem that limits work has steadily grown.

“While in the original HRS cohort, veterans were healthier than non-veterans, between the oldest and youngest cohorts, the health status of veterans age 51 to 56 deteriorated sharply relative to non-veterans,” said the study.

Veterans and retirement

Additionally, in light of the recent moves by Congress to address the military’s retirement benefits, the researchers looked at wealth and savings for veterans as they approached retirement age. Not only did the researchers find that younger veterans receive about half the amount in pensions from the military than their older counterparts, but there was also a reversal in veteran household wealth as compared to non-veterans.

So while newer retirement-age veterans have all been volunteers with roughly similar service demographics, they have worse health and wealth outcomes compared to older veteran peers and even non-veterans of their age group.

In the end, the researchers said they could not fully identify the reasons for the decline in positive outcomes for veterans, especially compared to non-veterans, and that these conclusions should factor into future policy decisions.

“Our findings suggest that policies meant to increase the benefits of veterans who are already retired should be designed differently and targeted separately for members of different cohorts,” they concluded. “Veterans from the two oldest HRS cohorts are better prepared for retirement than non-veterans from those cohorts, and there is no difference when covariates are included in the regression. The problem arises for the youngest HRS cohort.” (Source: Business Insider | Bob Bryant | November 23, 2015)

By Thomas Crisp

Contributing Columnist

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