Pay caps, reduced retirement benefits and higher out-of-pocket costs for retiree health care are in the

military’s future under the Defense Department’s new strategy that will be announced this afternoon.

For 2013 and 2014, the Defense Department is budgeting for military raises that fully match the average increase in private-sector wages, according to congressional aides who have been briefed on the Pentagon’s plans.

That means the Jan. 1, 2013 raise would be 1.7 percent, under the Obama administration plan. The 2014 raise will not be known until next year because it would be calculated to follow the pay formula in law to match the Employment Cost Index of private-sector raises.  Military Times