As the burden of defense borne by reserve forces has increased, more attention has been paid to differences between the compensation systems for the reserve and active components. One particular emphasis is on the retirement systems, a key difference being that reserve members who complete 20 years must wait until age 60 to draw benefits whereas active members can draw benefits immediately upon discharge. This monograph compares the reserve and active retirement systems, discusses the importance of structuring compensation to enable flexibility in managing active and reserve manpower, describes how the debate over reserve retirement reform has differed from active component retirement reform debate, and considers obstacles to reform and how they might be overcome. It also provides a quantitative assessment of several past congressional proposals to change the reserve retirement system in terms of their effects on reserve participation and personnel costs, concluding that proposals to reduce the age at which eligible members may begin receiving retirement benefits are not cost-effective means of sustaining or increasing reserve component retention. It also concludes that a menu of member options can be a powerful tool to maintain morale and overcome obstacles to reform. Current members could be given the choice of staying in the current retirement system or joining the new one, and the choice might be offered over a period of time, say five years. New entrants and reentrants with few years of service might be placed under the new system.