New thread--Adjusting the military retirement rules?

[The Chief]

Speculation, aye, however there are a number of proposals out there, being talked about, to change the system. The results of the election may affect.

One "idea" that need political capital is the correction of the so call 'gender bias' in the military retirement system. Roughly, the proposal is for all military to retire at 62/65/67 like everyone else. That is you put you time in, say 10, 20, 30 or so years, then a delayed retirement paycheck comes rolling in based on that service when you reach 6x. The argument is that most females in the military do not retire, they put in 10 years on average (heard that number not sure about it), get out and get no credit or renumeration. They lose everything, or so the argument goes. I think that or some variation is coming down the road.

Another proposal heard in far left looney bins is combining VA and DOD medical facilities. Would open the door to non-military folks (very poor?). Doubt that would ever fly, but ........

Let me tell you a couple of things that have happend in the past few years that you all might not be aware of, but me being retired and involved, well ....

A. My social security benefits are cut almost in half. Windfall they tell me, something about receiving a Govt retirement check, and while that alone does not throw me under the bus, they calculate my overall income to determine what they will steal from me, using the excuse that I receive two Govt checks: CSRA and SS.

B. My Medicare Part B now costs me near $3,000 a year and is going up. This is because of my income. So, being a retired Govt type, I enrolled in FEHBP (think that is the acronym, it is the federal healh insurance program, not available to military). It has better coverage than Medicare Part B, and only costs me $900 a year. Good deal me thinks so I called to cancel my Medicare Part B because I had alternate insurance. Well now they said, can do but unless you have Medicare Part B you cannot receive treatment at any military medical facilities nor can you receive medicines from any military pharmacy. **See the note about combining VA/Military facilities with some civilian patients above.

In summation, I think we will see large changes in the near future. It is in the wind.

 

[LazersGoPEWPEW]

I don't see how not letting military personnel receive their retirement til 60+ is going to help shape the force. One if I know I can get a retirement after 10 years why would I not just get out then if I know staying in for 20 is not going to allow me to access the retirement sooner?

Or what about the guys that get out and never make it to 60. Do their families receive the full benefits? I highly doubt that would happen.

As for women not staying for longer than 10....you're going to spend nearly 10 no matter which way you go. 4 active and 4 inactive is pretty standard am I right? 8yrs. 2yrs shy of 10. It just seems absurd to make people wait 30, 20, 10 years to receive their retirement.

Now if I could stay in for 40 years and be like a 10 star admiral sure that would be great.(sarcasm) Maybe I'm jumping the gun on this and my youth is firing me up about it but I can't find the logic in how it's going to help the military as a whole or the government. I'll serve my country regardless of what happens but my motivation sure is going to plummet if this takes effect.

I guess that'll lead into a question that maybe no one can answer. What can be done to prevent it?

 

[phrogdriver]

I don't see how not letting military personnel receive their retirement til 60+ is going to help shape the force. One if I know I can get a retirement after 10 years why would I not just get out then if I know staying in for 20 is not going to allow me to access the retirement sooner?


As for women not staying for longer than 10....you're going to spend nearly 10 no matter which way you go. 4 active and 4 inactive is pretty standard am I right? 8yrs. 2yrs shy of 10.

The point isn't that you don't get benefits 'till 60. The point is that right now, retirement is a binary system. You stay until 20 years and get fabulous prizes, or you get out before then and get a screen door hitting you on the ass as you leave. The problem is that too many get out after their first hitch, but not enough get out at every other chance before 20, then another horde hits the exits. We lose a lot of NCOs and senior company grade officers, then later have way too many SNCOs and field grade. If you got some retirement "vesting" before 20, you might not have huge plateaus in manning at certain grades.

BTW, the 4 inactive doesn't count as years of service.

Anyway, I tend to think that the whole "who'll help DoD the most" game is a little simplistic. My biggest concern is that domestic "entitlement" spending will crowd out every other thing in the budget, namely national defense.

 

[LazersGoPEWPEW]

The point isn't that you don't get benefits 'till 60. The point is that right now, retirement is a binary system. You stay until 20 years and get fabulous prizes, or you get out before then and get a screen door hitting you on the ass as you leave. The problem is that too many get out after their first hitch, but not enough get out at every other chance before 20, then another horde hits the exits. We lose a lot of NCOs and senior company grade officers, then later have way too many SNCOs and field grade. If you got some retirement "vesting" before 20, you might not have huge plateaus in manning at certain grades.

BTW, the 4 inactive doesn't count as years of service.

Anyway, I tend to think that the whole "who'll help DoD the most" game is a little simplistic. My biggest concern is that domestic "entitlement" spending will crowd out every other thing in the budget, namely national defense.

Why not just give out a smaller retirement after 10yrs and 15yrs based on percentages kind of like after your 20 the percentage of retirement goes up right?(at least that's how it has been explained to me)

Thanks for explaining that. This stuff is important to me and I'd like to get every angle I can.

 

[RockySLP]

I don't see how not letting military personnel receive their retirement til 60+ is going to help shape the force. One if I know I can get a retirement after 10 years why would I not just get out then if I know staying in for 20 is not going to allow me to access the retirement sooner?

Or what about the guys that get out and never make it to 60. Do their families receive the full benefits? I highly doubt that would happen.

It just seems absurd to make people wait 30, 20, 10 years to receive their retirement.

Now if I could stay in for 40 years and be like a 10 star admiral sure that would be great.(sarcasm) Maybe I'm jumping the gun on this and my youth is firing me up about it but I can't find the logic in how it's going to help the military as a whole or the government. I'll serve my country regardless of what happens but my motivation sure is going to plummet if this takes effect.

I think you might be misunderstanding the force-shaping idea. The posts from The Chief and Phrogdriver seem to reference two different types of reforms: 1) a pension plan that doesn't kick in until a certain age and 2) a defined contribution plan that you can tap like any 401(k).

Regarding the latter:

It would help shape the force in several ways. 1) It would allow under-performers to exit without hanging on for 20 years. After advancement prospects appear poor, why do people stick around? Only for the pension. Let them do something rewarding in a civilian career and let the military focus its resources. 2) It would resemble almost all non-government plans and would therefore seem like less of an anachronism to young people thinking of joining (and perhaps separating), many of whom will weigh it as a downside of the military.

The current retirement plan has existed for the better part of a century with only minor changes (Redux, etc.) It was designed to ensure we have experienced servicemen (feet in boots) for a war. It is not designed to attract the most valuable members for the most important jobs. It is also absurdly expensive, binding to the government, and not responsive to our complex needs.

As for dying early: similar to a 401(k), your plan would consist of your assets from jump street. Family members can inherit them.


Retirement reform WILL come.

 

[jt71582]

Great thread, and I'd be interested to hear responses on Lazers' last post.

I plan on making a long career out of this. I know everyone says wait until after your first deployment to make such decisions, and I will, but for now the plan is to be 'Like a 10 star Admiral' . Probably the number one reason I'm paying such close attention to this election is the talk of cutting the defense budget. I'd really like to have a good long career in the military without getting a phone call, "Thanks for playing, but POTUS says you've got to go."

 

[Spekkio]

I hadn't really thought about it before, but I agree with the issues regarding retirement starting at 20 years. However, I don't like the idea of making retired military wait until 60s to collect on their pensions. This line of work is generally more dangerous than other professions, so I don't like the idea of effectively forcing a ~40 year old person to find another career after they've done their due time (I'm aware many people do anyway, but it's on their own volition). While I don't think that someone who goes 10 and out should collect immediately, someone who does 20 or 30 definitely should have access to their pension right away. Perhaps the scaled rules can be made so that those who get out at 10-15 have to wait until what would ordinarilly be the 20 year mark to collect pensions.

I read somewhere that only ~15% of servicemembers actually make it to retirement. Adjusting that 20 year mark might significantly increase the amount of $ uncle Sam has to pay out.

 

[Ducky]

If people staying in for 4-19 years and not getting retirement/pension is a real problem, then the armed forces should educate all new members on the importance of contributing to a retirement account like every other American has to do. My mother works in the civilian world and must contribute her own hard earned $$$ in order to secure her financial future. I for one would be extremely less likely to go the distance if I would not be receiving military retirement until 60+. I would eventualy need a civ job to sustain my family until I reach 60+. So why would I spend an extra 10 or even 20 years after my aviation commitment when I could find a much higher paying job in the private sector?

Another possible solution would be to force those "just biding their time" into an early retirement at a reduced rate or amount. That would save big $ over the long run, and also increase the respect and honor that would come with someone crossing the 20 or 30 yr mark.

 

[xmid]

One if I know I can get a retirement after 10 years why would I not just get out then if I know staying in for 20 is not going to allow me to access the retirement sooner?

Thats the thing though. You aren't elligible for retirement if you get out at 10 years. You get nothing. If you stay for 20 or more you get retirement.

What effect would a new retirement policy have on those that are already in the military? Would it be retroactive? Would those on retirement that were not 6X yet have their retirement cut off? Would those on active duty have the rules that applied to their retirement change? Or would the changes be for all that entered the military after a certain date?

Isn't the purpose of bonuses to get people to stay in longer and fill those gaps without necessarilly staying to 20? If I knew that staying in for an extra 2-3...4 years would mean that I would get a six figure bonus I would definitely consider it. It would be far cheaper than having the "hangers on" collect retirement yet accomplish manning goals...

 

[LazersGoPEWPEW]

Thats the thing though. You aren't elligible for retirement if you get out at 10 years. You get nothing. If you stay for 20 or more you get retirement.

What effect would a new retirement policy have on those that are already in the military? Would it be retroactive? Would those on retirement that were not 6X yet have their retirement cut off? Would those on active duty have the rules that applied to their retirement change? Or would the changes be for all that entered the military after a certain date?

Isn't the purpose of bonuses to get people to stay in longer and fill those gaps without necessarilly staying to 20? If I knew that staying in for an extra 2-3...4 years would mean that I would get a six figure bonus I would definitely consider it. It would be far cheaper than having the "hangers on" collect retirement yet accomplish manning goals...

Yea I understand that. I was trying to refer to a "new" plan that seems to be in the works.

If it went into action and I knew after 10 yrs I'd get something at 60 I'd have little motivation to stay in knowing that 32 would be a ripe age for starting a good civilian job and putting in 30yrs at that company and at age 60 collecting pension from my 10yrs of service and my 30yrs from my civ job.

I want the 20 and I plan on giving my all to the military if it works out to be what works well for me. I also agree with the above statement regarding the dangerous line of work we're in.

It's not just dangerous during a war, it's dangerous during training too.

I was also under the impression that there were pension plans that military personnel could contribute to. There was a finance Army LTC while I was in AROTC that was going over a lot of ways one could go about investing while in the military. A bit over my head at the time but I do recall some options for investing and such.

I don't know if they were 401Ks per se but it seems that there are already options in place for that. What it boils down to is that a 401K is taking from your right now salary. There's a lot of information to chomp into. I think this is going to be good stuff here tonight.

 

[Spekkio]

If people staying in for 4-19 years and not getting retirement/pension is a real problem, then the armed forces should educate all new members on the importance of contributing to a retirement account like every other American has to do. My mother works in the civilian world and must contribute her own hard earned $$$ in order to secure her financial future. I for one would be extremely less likely to go the distance if I would not be receiving military retirement until 60+. I would eventualy need a civ job to sustain my family until I reach 60+. So why would I spend an extra 10 or even 20 years after my aviation commitment when I could find a much higher paying job in the private sector?

Another possible solution would be to force those "just biding their time" into an early retirement at a reduced rate or amount. That would save big $ over the long run, and also increase the respect and honor that would come with someone crossing the 20 or 30 yr mark.

It's easy to say that military members should contribute to retirement with an officer's salary. Your enlisted guys make about half your salary with similar time in service (not including bonuses). Supporting a family and then putting a significant amount away for retirement to actually make a difference isn't exactly easy for these guys.

As for the 60+ requirement, as stated earlier, I completely agree. Furthermore, it is more difficult for a 40-something year old to start up a new career than a 20-something year old for a whole slew of factors, most of which come down to the fact that companies can usually get more work for their dollar from someone who is younger. Not saying it's impossible, but it's silly to force someone who has spent 20 years putting his life on the line for the defense of his country to find a new career for 20 more years before he can cash in on retirement. As some stated before, getting out in your upper 20s/lower 30s and using your military experience to find long-term employment is much more practical than doing it in your lower to mid 40s and having nothing additional to show for it unless you manage to live to 6x.

 

[FlyinSpy]

The specific proposals for a modification of the current retirement system (known in the business as "cliff vesting") can be found in the "Final Report to Congress of the Commission on the National Guard and Reserves" (http://www.cngr.gov/resource-center.CNGR-reports.asp). The report makes for some very interesting reading in general, but the retirement-specific recommendations can be found starting on page 169.

I'm too tired to summarize it right now, but it's worth a read - especially for folks not yet on active duty. (Although the Commission was on the Reserve/NG, it dealt a fair bit with retirement issues - and was the genesis for a lot of the discussion you hear now on this subject.)

 

[HueyCobra8151]

My $0.02: If Obama wins, it will be a Democrat Executive and Legislative branch, so they could theoretically pass a lot of legislation, but "Democrats Slash Military Benefits for Retirees" is an ugly headline, and so I doubt they will touch it.

If McCain wins he may not necessarily be able to get legislation passed due to the antagonist relationship between the two branches (IMO, this is always a good thing). If McCain tried to slash the benefits the headline would read "House Democrats Object as McCain Pushes To Slash Military Benefits for Retirees."

Either way, no point in getting all worked up over hypotheticals, have a beer instead.

 

[LazersGoPEWPEW]

The specific proposals for a modification of the current retirement system (known in the business as "cliff vesting") can be found in the "Final Report to Congress of the Commission on the National Guard and Reserves" (http://www.cngr.gov/resource-center.CNGR-reports.asp). The report makes for some very interesting reading in general, but the retirement-specific recommendations can be found starting on page 169.

I'm too tired to summarize it right now, but it's worth a read - especially for folks not yet on active duty. (Although the Commission was on the Reserve/NG, it dealt a fair bit with retirement issues - and was the genesis for a lot of the discussion you hear now on this subject.)

A single system for both active and reserve component members would be an important component
of an integrated personnel management structure and would foster a continuum of service, as envi-
sioned in other changes recommended by the Commission.

Recommendations:
27. Congress should amend laws to place the active and reserve components into the
same retirement system. Current service members should be grandfathered under
the existing system but offered the option of converting to the new one; a five-
year transition period should be provided for new entrants, during which time
they could opt for either the new or the old plan.

28. Congress should set the age for receipt of a military retirement annuity at 62
for service members who serve for at least 10 years, 60 for members who serve
for at least 20 years, and 57 for members who serve for at least 30 years. Those
who wish to receive their annuity at an earlier age should be eligible to do so, but
the annuity should be reduced 5 percent for each year the recipient is under the
statutory minimum retirement age (consistent with the Federal Employees Retire-
ment System). For reserve component members, retired pay would continue to be
calculated on the number of creditable retirement years, based on earning at least
50 retirement points per creditable year.

a. Congress should expand current statutory authority to permit all service
members to receive up to 5 percent of annual basic pay in matching govern-
ment contributions to the Thrift Savings Plan; the government’s contribution
would vest at 10 years of service, and the Thrift Savings Plan benefit would be
portable and thus capable of being rolled over into a civilian 401(k) account.

b. Congress should pass laws providing that the military retirement system allow
some portion of its benefits to be vested at 10 years of service.

c. As part of the reformed retirement system, retention would be encouraged
by making service members eligible to receive “gate pay” at pivotal years of
service. Such pay would come in the form of a bonus equal to a percentage
of annual basic pay at the end of the year of service, at the discretion of the
services.

d. As part of the reformed retirement system, service members who are vested
would receive separation pay based on the number of years served and their
pay grade when they complete their service.

After reading it I can see where they are coming from to a certain extent.

I don't necessarily agree with it but I think I've got a much better grasp on what they're aiming for.

 

[Ducky]

It's easy to say that military members should contribute to retirement with an officer's salary. Your enlisted guys make about half your salary with similar time in service (not including bonuses). Supporting a family and then putting a significant amount away for retirement to actually make a difference isn't exactly easy for these guys.

I never meant to insinuate that it would be easy for them to save for retirement and thats another reason that a delayed retirement program is not a good idea. The point I was trying to get across is that if we put as much effort into financial education of our officers and enlisted as we do that damn Combined Federal Campaign it would at least be a step in the right direction. Even a small insignificant amount invested/saved annually starting at age 18 will be a sizeable amount.

If only TSP would do contribution matching it would be worth it. Does anyone know how TSP and such is doing in this market? I decided to not to invest in TSP because I use Merrill Lynch.

From what was posted above, "gate pay" would need to be a hell of alot otherwise there doesnt seem to be much incentive to stay in past 10 yrs. Wow I would get it at 60 vice 62. Perhaps someone could correct me if Im wrong but it seems like those that only stay in for 10 yrs would get a sweet deal while those that do 20 would basically be shafted compared to what we have now.