No More Retiring at 20 Years? [Archive] - Professional Soldiers ®

wet dog

07-26-2011, 08:56

The plan calls for a corporate-style benefits program that would contribute money to troops’ retirement savings account rather than the promise of a future monthly pension, according to a new proposal from an influential Pentagon advisory board.

The move would save the Pentagon money -- at a time when it's being asked to cut at least $400 billion -- and benefit troops who leave with less than 20 years of service.

A corporate style plan would be for a sitting president to do a good job, followed by a new president (CEO) who would slash costs, raising corporate stock values and take 3rd/4thQ profits for himself, the majority of the "company workers" being left behind.

Intel Cop

07-26-2011, 09:22

I used to be totally against giving up defined benefit pensions, but there can be some major benefits. For people who don't stay 20, this would be a score because it can be rolled over into their next career. Even after a mere four years, the soldier would have something to show for it, and at a young age to boot. For those who do stay, there would be increased benefit to staying longer than 20 to increase contributions, not to mention the likely option to increase savings throughout their career and retire with more than the minimum saved. Lastly, those who do a full 20 and retire prior to 40 years old will be forced to get a second career anyway; being able to roll this savings over would greatly increase their retirement options when they reach true retirement age.

Worth looking at in the least.

1stindoor

07-26-2011, 10:45

I used to be totally against giving up defined benefit pensions,

I still am...because once they break this benefit...there's no stopping them from breaking it again and again and again...until we are nothing more than hollowed out version of what we were.

...but there can be some major benefits.

Only for those that aren't affected by the loss of those same benefits...which are not a "benefit" to those that have earned it the hard way.

For people who don't stay 20, this would be a score because it can be rolled over into their next career. Even after a mere four years, the soldier would have something to show for it, and at a young age to boot.

You're right...and our institutional knowledge, professional fighting force, and retention and recruitment will suffer because of it. After all why stay at all...get your training, your certificates, your experience, and get out and put it to use on the civilian side.

For those who do stay, there would be increased benefit to staying longer than 20 to increase contributions, not to mention the likely option to increase savings throughout their career and retire with more than the minimum saved.

Only until those in Congress decide to redo the "benefits" package again. And let's not forget that our "contributions" will be offset by our Base Pay. Afterall, it's easy to give a payraise...and then increase the amount of "minimum contributions" to make it equal out...to a net gain of "not so much."

Lastly, those who do a full 20 and retire prior to 40 years old will be forced to get a second career anyway; being able to roll this savings over would greatly increase their retirement options when they reach true retirement age.

Why should they be "forced" to get a second career? Isn't 20 plus years of wear and tear on your body, burying your friends, leaving your family, and moving around the country enough?
Worth looking at in the least.

No thanks...worth fighting for though.

JJ_BPK

07-26-2011, 10:46

I see one major down side,,

If you make O6 or E9 by 15yrs,, what do you do for the next 20 years??

I think they will stretch out the promotion schedules, up the clip point from 450 to 950, double the allowed attempts, and alter the pay tables to accommodate the new time lines..

:munchin

Badger52

07-26-2011, 11:33

Everything 1stindoor said.
Not my first rodeo; these things are cyclic, and always at the expense of the Soldier. Military is first at being "volunteered" to tighten the belt. The collective knowledge-base will decline, mid-level expertise will hemorrhage.

How 'bout making the NFL league-minimum $18K/yr, hmmm?
Freshmen legislators make E1 pay, E3 after 6 mos if they weren't run out of their local area in a scandal, unless they were appointed because their predecessor was.

The list of alphabet agencies which could be completely eliminated - but who bring zero value to the table in terms of any of the original prime-directives (like "provide for the common defense") - is a long one. Make yer deficit up there and move on.

Then again my #1 calls me a curmudgeon.
(But he doesn't remember McNamara, I do.)

Safeguarding the country is an expense, not a profit center.
Lean Sick Sigma THAT!
:mad:

abc_123

07-26-2011, 12:05

All talk of changing military benefits is 100% bullshit until Congress changes theirs and their health benefit package too.

1stindoor

07-26-2011, 12:07

I see one major down side,,

If you make O6 or E9 by 15yrs,, what do you do for the next 20 years??
:munchin

I often wonder what I would have done if I made E-8 and E-9 sooner. Hard to tell, because I couldn't keep my mouth shut as an E-7 and E-8...but I know this is something that will be addressed as our Xrays are progressing quickly. In another year or two they'll be looking at E-8 and still have 8 or more years ahead of them. It's a hard sell when you know that 2 years as a Tm Sgt and then you have to move out of the way. That's a lot of staff time...even if you're fortunate to get a 1SG position...or IODA Tm Sgt position...it's still a long way.

Intel Cop

07-26-2011, 12:27

Why should they be "forced" to get a second career? Isn't 20 plus years of wear and tear on your body, burying your friends, leaving your family, and moving around the country enough?

It is, without a doubt, enough. But the current retirement is not enough to carry one through their entire lives unfortunately. It was a big factor in my decision to leave actually. When I say forced, I don't mean by the government or anyone else; I'm referring to economic circumstance.

1stindoor

07-26-2011, 12:42

It is, without a doubt, enough. But the current retirement is not enough to carry one through their entire lives unfortunately. It was a big factor in my decision to leave actually. When I say forced, I don't mean by the government or anyone else; I'm referring to economic circumstance.

Thanks for the clarification. Although not wealthy by anyone's standards, we (the wife and I) have tried to plan accordingly. I'll retire from the Army in the next two years...she will from the school system in the next 8-10...barring an emergency, our house will be paid off in under 12...currently we're very close (minus house and cars) to being debt free. It means my second "career"...can just be a job.

craigepo

07-26-2011, 12:43

I don't like the idea of taking the military away from the defined-benefit plan. I would be for it for other government agencies, but 20+ years in the military leaves guys too damned broken-up. Moreover, investing in 401Ks can lead to the poorhouse when the economy goes to hell.

It seems like when I joined the army in 1988, there were close to one million guys. We are not close to that number now. Granted, we are not still worried about Russian hordes invading through the Fulda Gap, but I think we have bottomed-out on numbers and paycuts for military personnel.

I wonder how much the feds could save by doing away with the mega-redundant Department of Education.

1stindoor

07-26-2011, 12:50

I wonder how much the feds could save by doing away with the mega-redundant Department of Education.

Probably as much as they could save by cutting the DHS and TSA.

On a side note, I enlisted in '86, at that time I think the Army's numbers were hovering around 760,000 to 800,000. Of course that number shrank quite a bit after the early 90's. I seem to remember numbers ranging in 500,000 area prior to 9/11...but I could be wrong.

1stindoor

07-26-2011, 13:32

They now have what is called the thrift benefit plan. It is like a 401K where they take $$$ out of your pay and put it in a benefit plan. When I heard about them implementing this I had a feeling this was coming down the pipe.

But the TSP is choice. Their newest "good idea" would not be a choice...except between different options that will not work to your benefit. You'll just get to chose which "plan" works best for your individual circumstance. Of course there'll also be severe penalties for early withdrawels, as well as "opt-in" "opt-out" windows were you can choose your own poisen...miss the window though and it's another 12 mos with your same plan.

Stock market takes a dive...hey sorry...I guess your retirement pay isn't what you thought it would be. Need to "shore up" another part of the budget...hey that military pension plan can be "borrowed" against. I'm telling you the sky is falling rapidly on our retirement system.

JJ_BPK

07-26-2011, 14:08

Stock market takes a dive...hey sorry...I guess your retirement pay isn't what you thought it would be. Need to "shore up" another part of the budget...hey that military pension plan can be "borrowed" against. I'm telling you the sky is falling rapidly on our retirement system.

Just as a reference point on 401K's & IRA's. In 1997 I took (read was pushed into) an early retirement at 49, pulled my 401K out and into a Roll-Over IRA (c your bean-counter for an explanation).

By 2001 I had 10x the money in the market,, and it CRASHED,, lost 50+ %,, I am not a school trained investor.. :eek:

Between 2001 and 2008 that 50% re-bounded 4x,, and it CRASHED,, lost 50+ % again,, OK,, I'm an optimist... :o

Between 2008 and 2011 almost doubled again,, :D

Net Net,,

Market goes up and down,, and up again.. If you can't stand the EXCITEMENT,, Give your money to your elected representative and watch the national debt clock.. :mad:

My market strategy?? A mix of growth stocks and mutuals that cover foreign markets, minerals, and energy..

Still need to take a class..

If a young person puts 10% of their salary in mutuals, they should have a very large sum at retirement. For us FOG's it's harder but do-able..

Get a little education and it's much easier...

Also,, 401K's normally are augmented by employer contributions. Congress should put the money they normally set aside to fund your retirement into your 401K.

If I could have saved the money I paid into SS in my 401K,, I would be very happy. As it is,, I figure I'll get back maybe 10 cents on the dollar. the rest funding those that never contributed a penny....

BOfH

07-26-2011, 14:50

If I could have saved the money I paid into SS in my 401K,, I would be very happy. As it is,, I figure I'll get back maybe 10 cents on the dollar. the rest funding those that never contributed a penny....

This would be the downfall of the entitlement system, something that probably won't happen in my lifetime, but one can dream :munchin

My father is CIV with ARDEC and his pension plan was converted to a 401K about 8 years ago or so...

1stindoor

07-26-2011, 15:18

wet dog

07-26-2011, 17:44

I often wonder what I would have done if I made E-8 and E-9 sooner. Hard to tell, because I couldn't keep my mouth shut as an E-7 and E-8,...

Something tells me you couldn't keep your mouth shut as an E6, E5, E4, E3, or E2. Betting you were a quiet E1 though.

Love ya brother!:p

kgoerz

07-26-2011, 17:50

Buffalobob

07-26-2011, 18:17

Quote:
Originally Posted by Intel Cop View Post
For people who don't stay 20, this would be a score because it can be rolled over into their next career. Even after a mere four years, the soldier would have something to show for it, and at a young age to boot......................
You're right...and our institutional knowledge, professional fighting force, and retention and recruitment will suffer because of it. After all why stay at all...get your training, your certificates, your experience, and get out and put it to use on the civilian side.

This is based upon a premise or oversight which is not totally true although it is not totally untrue either. If a soldier leaves the military after his or her first tour they still have their time in service and if they go into a federal job as I did it all counts. In other words a person leaving the service can decide whether to make use of their time or not when deciding their next career choice.

As far as the ostrich maneuvered individual that has said the soldiers are taking it first. You might want to pull your head out of the sand and get out of the house and look around. The city and state employees have been taking a beating for a few years now. A lot of them are getting furloughed and have their pay frozen. Every one has their sight set on reducing the federal workforce and the budget for them. Soldiers are way on down the line as far as taking a hit. That is not to ignore the fact that they get paid very little for the risks of their job.

I personally, like my CSSR and a guaranteed retirement amount that is not indexed upon what imbeciles and crooks in the Congress and the White house do to the stock market or what Wall Street crooks do to it. But then again that is just me, I like a accurate rifle that hits what I shoot and not having to guess where the bullet is going to land. Stability and certainty is why I worked for the government.

nmap

07-26-2011, 20:25

My market strategy?? A mix of growth stocks and mutuals that cover foreign markets, minerals, and energy..

Probably a good strategy - in essence, it anticipates a declining dollar. It also anticipates a growing global economy...I'm not so sure we can expect strong growth for quite some time. MOO, YMMV.

Still need to take a class..

With respect...and recognizing there are different learning styles...you might gain more from a few books and some of the wealth of free materials already available to you.

If a young person puts 10% of their salary in mutuals, they should have a very large sum at retirement. For us FOG's it's harder but do-able..

But this supposes the right mutuals, and also a growing economy. Japan has spent some 20 years in a low-to-no growth pattern. We may experience the same.

Passive investing (buy and hold, even mutuals) works when economies are growing quickly - but not so well at other times. And, as your experience has shown, market declines can be brutal to the buy and hold investor.

Get a little education and it's much easier...

Again, with all due respect, education can help one avoid some losses and improve the chances of profit, but I don't think it ever gets easy. The competition is Goldman, Morgan Stanley, hedge fund operators, and everyone else. There is a niche for the individual investor, but the markets are not gentle.

If I could have saved the money I paid into SS in my 401K,, I would be very happy. As it is,, I figure I'll get back maybe 10 cents on the dollar. the rest funding those that never contributed a penny....

But one needs to consider the implicit assumptions. You know what you paid, and you have a view on the returns you would have received - but knowing what you will receive, and how long you'll need it is more problematic.

Let's suppose that due to clean living and medical science you live to 110. And also, let's suppose that interest rates decline further and the stock market just about everywhere goes nowhere. You might face the problem of running out of money.

Rhetorical question: does the average E3 or O3 really know investing? Do they study the market and the economy diligently? Do they read charts, examine the markets, subscribe to advisory services?

If they don't do all of that, and more, then they are betting their future on little more than a whim and some largely baseless opinions. That can win - but it can also leave them depending on the local food bank.

The defined benefit plan lets the organization retain the risk. The self-directed plan transfers that risk to the individual. Purely my opinion, but we might want to reflect on whether the average individual is up to the challenge.

And, as before - no offense meant, MOO, YMMV.

Paragrouper

07-26-2011, 21:19

Not my first rodeo; these things are cyclic, and always at the expense of the Soldier.

Maybe this is what they mean by the phrase 'shared sacrifice.'

Gee soldier, Great job! Sorry about your buddies who didn't make it. By the way, we're gonna 'change' your retirement benefits and share that money with others.

How nice

GratefulCitizen

07-26-2011, 21:50

Just as a reference point on 401K's & IRA's. In 1997 I took (read was pushed into) an early retirement at 49, pulled my 401K out and into a Roll-Over IRA (c your bean-counter for an explanation).

By 2001 I had 10x the money in the market,, and it CRASHED,, lost 50+ %,, I am not a school trained investor.. :eek:

Between 2001 and 2008 that 50% re-bounded 4x,, and it CRASHED,, lost 50+ % again,, OK,, I'm an optimist... :o

Between 2008 and 2011 almost doubled again,, :D

Net Net,,

Market goes up and down,, and up again.. If you can't stand the EXCITEMENT,, Give your money to your elected representative and watch the national debt clock.. :mad:

My market strategy?? A mix of growth stocks and mutuals that cover foreign markets, minerals, and energy..

Still need to take a class..

If a young person puts 10% of their salary in mutuals, they should have a very large sum at retirement. For us FOG's it's harder but do-able..

Get a little education and it's much easier...

Also,, 401K's normally are augmented by employer contributions. Congress should put the money they normally set aside to fund your retirement into your 401K.

If I could have saved the money I paid into SS in my 401K,, I would be very happy. As it is,, I figure I'll get back maybe 10 cents on the dollar. the rest funding those that never contributed a penny....

Develop a stop-loss strategy for your four-oh-wunk and those crashes can bring you a nice profit.

My best friend would borrow the max against his 401k every time the market had a significant down trend (his plan allowed borrowing @ 3% annual rate).
He'd reinvest after it fell a ways.

**********
**********

Paying attention to expense reduction is a good way to effectively "make" money.
Money not spent is better than money earned (they can't tax what you don't earn and don't spend).

Reducing baseline expenses also keeps your farther from your financial redline.
The extra room leaves the option of using leverage to buy things when they're cheap.

People tend to focus too much on net worth/nominal debt.

More important than that is net income minus outflow.
Even more important is the rate at which those two things (income and outflow) are changing (exponential growth).

From a math perspective:
Net worth = x
Net income - outflow = change in x with respect to time (dx/dt)
Exponential growth = change in the change in x with respect to time (d^2x/dt^2)

Seen many cases where people with not much income have done quite well for themselves by keeping expenses down and letting exponential growth take over.
The magic number for living frugally/working hard seems to be about 14 years (don't know why that number keeps popping up).

MOO. YMMV.

1stindoor

07-27-2011, 05:15

Paying attention to expense reduction is a good way to effectively "make" money.
Money not spent is better than money earned (they can't tax what you don't earn and don't spend).

That was quite possibly one of the most profound statements on saving I've ever heard. This will immediately get passed to my kids. Thanks.

Jgood

07-28-2011, 18:14

might be looking for a new job if this comes to be

GreenSalsa

07-28-2011, 19:32

I know its got a long way to go--passing congress and all but I'm certainly going to retire before this would pass...

The pension AND the health care plan were driving factors that gave me and my family the incentive to stay on--take those away, and I will be forced to find alternative methods to take care of my family.

Buffalobob

07-29-2011, 07:32

Even if they passed it tomorrow you would still probably fall under the plan we have now. Usually plans like this apply to people that start after plan is put in place and not retroactivly.

When DC gov't switched from the Fed CSSR to a stock market based fund they went retroactive for about 5 years or so and switched those employees who had been hired under the Fed plan.

Badger52

07-29-2011, 07:55

As far as the ostrich maneuvered individual that has said the soldiers are taking it first. You might want to pull your head out of the sand and get out of the house and look around. The city and state employees have been taking a beating for a few years now. A lot of them are getting furloughed and have their pay frozen. Every one has their sight set on reducing the federal workforce and the budget for them. Soldiers are way on down the line as far as taking a hit. That is not to ignore the fact that they get paid very little for the risks of their job.
Seeing just fine above ground here, with CSRS on tap & several colleagues who rue the day they moved things into FERS during the option period. Wife works for a county office whose mission is mandated & funded by whims of the state; state partially funds county based on how well they can manage matching donations from the Fed in other areas that they've gotten far too accustomed to (and often divert). She has those yo-yo hours, mandatory days off & frozen pay. But this isn't about me, her, or any hindsight I might have gained over time. It seems to me your very last sentence is the very reason this shouldn't be on the table in the first place. Certainly we could think of some non-Service parochial ricebowls that could stand being introduced to a good blade.

I'd like to see that stability continue to be available to those Soldiers under discussion of which you speak. The question already posed as to whether the average Soldier is up to managing such things (or has the time to) as proactively as the suits who dream them up seems quite valid.

This isn't the first time the good-idea faerie has come to the puzzle palace. It oftens ends with some proposal out of the Death by 1,000 Cuts playbook.

TOMAHAWK9521

07-29-2011, 10:41

All talk of changing military benefits is 100% bullshit until Congress changes theirs and their health benefit package too.

If I were king, I'd make everyone in congress have to use the military pay and benefits system. And no one's pay grade would be above E-7.

I did 20+ yrs serving my country by putting my ass on the line and have all kinds of chassis damage and I receive a small retirement paycheck (which is better than a stick in the eye) while most of those assholes do a fraction of the time posing as "public servants" and come out living like millionaires. :mad: What happened to them sacrificing for the service of our country?

Jgood

07-29-2011, 11:38

In the article it states no "grandfather" clause, if so might as well get out and find another job that doesn't break my body or take me away from my wife and kids Even if they passed it tomorrow you would still probably fall under the plan we have now. Usually plans like htis apply to people that start after plan is put in place and not retroactivly.

:rolleyes:

Eagle5US

07-29-2011, 12:20

Huh I wonder how that would hold up in court. When you signed up it said you could retire in 20 with a fixed income.

I swear they are doing their best to gut this country. I cant blame you at all for finding another job if that happens.

Yup:
- and when I signed up my FAMILY and I got free dental care both during my service AND after I retired. - GONE, now under insurance I pay for and few accept
- and when I signed up, my FAMILY and I got free medical care after I retired. - GONE, now will be some sort of "Tri-Care HMO variant" that is expected to TRIPLE in cost over the next 3 years
Retirees fought these developments for years; didn't matter. Washington didn't (and still doesn't) care. They have illegal immigrants they need to provide free health and dental care to instead...but I digress:rolleyes:

- and when I got Commissioned, I could retire with the average of my three highest years of pay, regardless of my rank on my ID card - though my ID card would reflect my highest rank achieved at my 30 yr anniversary. GONE, now you must hold your Commission for 10 years to retire with that top three years of pay, otherwise you revert back to your top three years of pay BEFORE your Commission.

Seems that there are little clauses that are in the budget that allow changes to the "enlistment entitlements" at the needs and discretion of the USG. It doesn't matter what you signed up for, you end up with whatever they feel like giving to you until they feel like taking that away too.

Pete

07-29-2011, 12:54

It is interesting that in the original article it mentioned up to a 16.5% "contribution" to fund your retirement.

Now you get your whole paycheck and then a portion of your base pay as retirement.

In effect that's a 16.5% reduction in pay for the term of your service.

1stindoor

07-29-2011, 13:05

In effect that's a 16.5% reduction in pay for the term of your service.

That's exactly what I thought too; and there's nothing to say that as our Pay Raises come up...so will our mandatory "contributions."

GratefulCitizen

07-29-2011, 20:37

Every retirement system will fail to fully meet obligations for those retiring now and in the near future.
Every single one.

The reason is demographics.

Even if all of them were fully funded, it still wouldn't be enough.
Money isn't real. Goods and services are real.

Given retiree "A", retiree "B", and worker "C"; the money all flows to worker "C".
The retirees bid up prices, competing among themselves, for goods and services from the worker.

Taxing the worker won't be effective.
He'll just work less and there will be less goods and services to go around.

All retirement systems are dependent upon those still working.
Insufficient workers/excessive retirees results in a lower standard of living for retirees.

We cannot unring this bell.

The only solution would be to cut off social benefits for able-bodied people of working age, and encourage massive immigration.
Even at that, tax burdens cannot be excessive.

Excessive tax burdens would reduce incentive to produce.
Government must shrink (relative to the economy), and this contraction must come by reducing transfer payments to able-bodied people and cutting government jobs.