No More Retiring at 20 Years?

[BMT (RIP)]

http://www.military.com/news/article...tml?ESRC=eb.nl


BMT

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]

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]

Originally Posted by Intel Cop

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.

Originally Posted by Intel Cop

...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.

Originally Posted by Intel Cop

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.

Originally Posted by Intel Cop

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."

Originally Posted by Intel Cop

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?

Originally Posted by Intel Cop

Worth looking at in the least.

No thanks...worth fighting for though.

[JJ_BPK]

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..

[Badger52]

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!

[abc_123]

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

[1stindoor]

Originally Posted by JJ_BPK

I see one major down side,,

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

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]

Originally Posted by 1stindoor

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]

Originally Posted by Intel Cop

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]

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]

Originally Posted by craigepo

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]

Originally Posted by Brush Okie

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]

Originally Posted by 1stindoor

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..

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

Between 2008 and 2011 almost doubled again,,

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..

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]

Originally Posted by JJ_BPK

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

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