A congressionally chartered commission has called for scrapping the entire military retirement system and making active-duty troops wait until at least age 57 to begin drawing retired pay.

The proposal, which would spell the end of the current active-duty system that pays nondisability retirement immediately after a service member completes a minimum of 20 years of service, is among 95 recommendations in the final report of the Commission on the National Guard and Reserve, which went well beyond its original charter to review the structure and management of the reserve components and delved into personnel policies for active-duty members.

Under current retirement rules, an active-duty member is eligible for retired pay immediately after completing a minimum of 20 years of service, which can be as young as age 37. However, reservists must wait until age 60 to draw retired pay, although a law signed Jan. 28 by President Bush allows reservists to draw retired pay 90 days earlier than age 60 for every 90 days of mobilization in support of a contingency operation.

Under the commission’s plan, a revamped retired system would grant limited retirement benefits starting at 10 years of service, although payments would not begin until age 62. Those who serve at least 20 years could receive payments at age 60; those who serve 30 years could get them at age 57.
Exerpt from artile in Army Times.

Writings on the wall and has been for at least several decades.

We need to keep in mind that it is expected that the govt explore all options before making any binding decisions. They utilize commissions and studies such as the one you provided to move forward or not. Its a recommendation that may or may not get included into law.

When a vet on retirement passes away, does the wife or kids get anything or do the payments just stop?

When a military retiree dies their retirement pay stops. This means that the surviving spouse will be left without a substantial income source. If you are a retiree you need to give serious thought to how you can protect your spouse from the hardships caused by the loss your retirement pay.

One option available to you is the Survivor Benefit Plan. The SBP is an insurance plan that will pay your surviving spouse a monthly payment (annuity) to help make up for the loss of your retirement income. The plan is designed to protect your survivors against the risks of:

Your early death;
Your survivor outliving the benefits; and
Inflation.
Military.com