Posted on Jul 20, 2015
The Pentagon is backing the new retirement plan, which is similar to a 401K. What are your thoughts on the projected plan?
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Pentagon is officially backing a "blended" system that would shrink the size of the current pension by about 20 percent yet supplement that benefit by offering government contributions to individual retirement investment accounts.
The Current Retirement plan does not require Soldiers to invest their own money in order to receive a guaranteed retirement at 20 years. Under the new program Service members will have to take a portion of their pay and invest it toward their retirement with government matching up to a certain percentage.
We currently have the TSP which is an investment opportunity for Soldiers to utilize as an addition to their retirement and can be a valuable investment tool for those not wishing to make a go at the 20 years required for the current 50% pay for the rest of your life retirement.
This will be very good for government finance reduction costs, but in this Soldier's opinion not good for the Service Members who risk their lives without hesitation for their country.
http://www.militarytimes.com/story/military/benefits/retirement/2015/06/10/dod-retirement-plan-details-approved/71011882/
The Current Retirement plan does not require Soldiers to invest their own money in order to receive a guaranteed retirement at 20 years. Under the new program Service members will have to take a portion of their pay and invest it toward their retirement with government matching up to a certain percentage.
We currently have the TSP which is an investment opportunity for Soldiers to utilize as an addition to their retirement and can be a valuable investment tool for those not wishing to make a go at the 20 years required for the current 50% pay for the rest of your life retirement.
This will be very good for government finance reduction costs, but in this Soldier's opinion not good for the Service Members who risk their lives without hesitation for their country.
http://www.militarytimes.com/story/military/benefits/retirement/2015/06/10/dod-retirement-plan-details-approved/71011882/
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Retirement
Military Career
Retirement Military Career
Edited >1 y ago
Posted >1 y ago
Responses: 47
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The current vs. new plan can both be good or bad depending on what you do, i.e. do you go 5-10% into TSP/401 or not. If you don't invest into your own retirement, stop your bitching now. Neither will carry you long term. The new plan becomes more like FERS for civil servants which is a combination of fixed annuity and TSP. I did see an "adviser" bemoan what's going on with the baby boomers. That's what not investing in yourself gets. Mil types have to get past the "hand me money" syndrome and get on with investing in yourself. If you are not doing 5% TSP minimum, you're throwing money away as the first 5% makes a 100% return that payday with the current matching program. Always do the matching at least, 10% is better.
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1SG (Join to see)
Thanks for your thoughts. I agree that everybody needs to be investing towards retirement. Even under the current retirement plan, if you want to retire early and/or not have to worry about scraping buy (especially if your enlisted) you had better invest. The new retirement plan will equal the current 50% if investing properly, so you wont be able to have your 50% pay plus your investment. You will just have your TSP/401K investment without the added security of your guaranteed retirement. I hope nothing happens to the market when its time to retire as well. I know my father-in-law had to delay his retirement plans for several years because of the 2008 market crash. My wife and i took a huge hit during that time as well, lucky for us we had time before we retire. We also have retirement plus investments. I hope the market doesnt take a huge down turn again though. I couldn't imagine how bad that would suck if all i had was just 401/TSP. It took over four years before we saw anything possitive coming from our TSP investments. For a long time no loss was a good month. I'm confident i will be grandfathered, so I'm not worried about me. I'm concerned for our future Military Men and Women.
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MSG (Join to see)
I agree because if you don't invest know your retirement will suck as you will become apart of the society in shock when there is not enough fund in the SSI programs to take care of you!
I started setting funds aside in 1992 when I learned what the Rule of 72 it is very very important for you to map out the rest of your life after the Armed Forces Career has come to an end. Prepare now and if you need help email me at [login to see]
I started setting funds aside in 1992 when I learned what the Rule of 72 it is very very important for you to map out the rest of your life after the Armed Forces Career has come to an end. Prepare now and if you need help email me at [login to see]
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There is already a system to obtain a return for responsible young service members to get a return on their service if they do not do 20 years that is fulfilled to an extent by the TSP program. Further, I do not think that acquiring a free four year degree such as with the post 9/11 GI Bill, VA loans, and other benefits that are obtained after 90 days of AD service is walking away with nothing if you do not do 20 years. I think this is a terrible plan that is estimated not only to save money even if it was practical to contribute the maximum for 20 years that I am certain numbers have been crunched and the expected contribution has already been calculated and will be far less. In my opinion this is a poor plan and is not a benefit to future men and women who enlist. Short story long and long story short I feel that I am glad that I will be grandfathered in and will not be forced into this contributory program that seems to be dependent on a lot of "ifs" for it to be rewarding.
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1SG (Join to see)
Zero isn't exactly a comforting number, over a career, for this projected concept.
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CPT (Join to see)
When I got to my first unit as a PV2 I had a Squad leader that highly recommended for us to start saving our money in Roth IRA's (which had just been created for the public to invest in) As a Young Soldier who knew nothing about saving, finances or investments, I blindly followed his advice after paying off my MGIB and put in $100 a month. That was a long time ago and I have since educated myself on retirement planning. I am very happy that the Army is finally going to be matching TSP contributions, thats just free money.
That being said, I also disagree with taking away the guaranteed pension at 20 years of military service. Ours is not a corporate job nor a standard 9-5 job and to compare our profession with those is the same as saying mall security people have the same job (and risks) as police officers (who should also have a guaranteed pension along with the rest of the emergency services).
That being said, I also disagree with taking away the guaranteed pension at 20 years of military service. Ours is not a corporate job nor a standard 9-5 job and to compare our profession with those is the same as saying mall security people have the same job (and risks) as police officers (who should also have a guaranteed pension along with the rest of the emergency services).
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SSG Joseph Geraci Joseph, this is one of worst kept secrets in Washington, the DoD is already counting on saving this money two years ago. We know that Congress would not take the action but to save money, so the bottom line is there will be a less generous pension plan. If you save your own money in TSP and the military matches you may have more in total retirement money. If you have no discipline or just are too strapped to save then you will have less.
As an Army Reservist, I don't get the pension until age 60. So I don't know the impact yet.
The government and large businesses are shifting the cost to workers because they can control costs. They also get rid of the risk of us living to 120 or 130 years old, which no company expected 20 years ago, but is being projected by some actuaries.
What get's me upset is the desire to cut the military benefits without cutting other government pensions and especially Congressional and Executive branch pensions. If we want to control cost, then let's have everyone share the pain.
Here is a link to a Washington Post article that is expressing some 'social venting', dated Dec, 2013. http://www.washingtonpost.com/business/economy/younger-veterans-outraged-by-budget-cuts-to-their-pension-benefits/2013/12/30/c43cbbec-6f02-11e3-b405-7e360f7e9fd2_story.html
As an Army Reservist, I don't get the pension until age 60. So I don't know the impact yet.
The government and large businesses are shifting the cost to workers because they can control costs. They also get rid of the risk of us living to 120 or 130 years old, which no company expected 20 years ago, but is being projected by some actuaries.
What get's me upset is the desire to cut the military benefits without cutting other government pensions and especially Congressional and Executive branch pensions. If we want to control cost, then let's have everyone share the pain.
Here is a link to a Washington Post article that is expressing some 'social venting', dated Dec, 2013. http://www.washingtonpost.com/business/economy/younger-veterans-outraged-by-budget-cuts-to-their-pension-benefits/2013/12/30/c43cbbec-6f02-11e3-b405-7e360f7e9fd2_story.html
Younger military veterans are angered by budget cuts to their pension benefits
The trims are the most controversial piece of the bipartisan plan signed into law by Obama last week.
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The proposal is still in Congress so it has not been signed into law. If you are currently in the military you will keep your current retirement plan unless you opt to switch to the new retirement proposal. I would not get too worked up until the "new retirement plan" makes it out of the House and Senate and enacted into law. Then we can all read it to see if it is better to keep what we currently are entitled to, or opt in to the new 401K type plan. Everyone will have a different take based on if you are an officer, warrant, NCO, or soldier and where you are in your career.
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LTC Dom Dionne
When you compare the 401K system they proposed with the current plan you are under (either High 3 or redux) you can either opt in to the new system or keep what you have. There is no penalty, you keep the retirement plan you were promised when you enlisted.
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LTC Dom Dionne
If the proposed 401K type retirement system is approved and becomes law. Then everyone that joins the military after it is enacted will fall under the 40% of basic pay at 20 years of service and get the continuation pay after going over 12 years of service. If you are in or under contract before the retirement plan changes you will be grandfathered in your current retirement plan.
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Simply put, my issue is whether the current system is "Sustainable" or not. If it was sustainable, then there was no need to change. If it was not sustainable, then will this change make it sustainable in the future.
As this change does not affect current members, we will not know the full ramifications for probably about 12~15 years.
For those currently serving DO NOT CHANGE. Not worth it. There are a few outliers where it "might be worth it" but, for the vast majority, NOT WORTH IT. For all others, the current system is better, because it is a "fire & forget" system and doesn't rely on "reinvestment of longevity bonuses" which the new system does.
That's the trick the new system has. You "break even" in the new system by taking the reenlistment bonuses at 12, 16, etc and putting them back in your retirement fund, and gaining interest on them. Without doing that, you lose money.
As this change does not affect current members, we will not know the full ramifications for probably about 12~15 years.
For those currently serving DO NOT CHANGE. Not worth it. There are a few outliers where it "might be worth it" but, for the vast majority, NOT WORTH IT. For all others, the current system is better, because it is a "fire & forget" system and doesn't rely on "reinvestment of longevity bonuses" which the new system does.
That's the trick the new system has. You "break even" in the new system by taking the reenlistment bonuses at 12, 16, etc and putting them back in your retirement fund, and gaining interest on them. Without doing that, you lose money.
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Maj (Join to see)
Wow...I'll have to find more on this for my own knowledge, but what we currently have seems like a much better deal based off of the words you just passed.
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Maj (Join to see)
I wonder about the sustainability as well when I see the military opening the 15 year retirement option every so often.
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Sgt Aaron Kennedy, MS
Maj (Join to see) It is, mainly because of "human nature." If you get a large check, chances are you are going to spend it. Whether it is to pay off debt, or give yourself a reward. "If' you invested it in your retirement, then heck yah, it would be a winning deal in the long run. But that is not going to happen. But... for anyone that is already in. You're past the break-even. NOT WORTH IT.
Now, the 15 year retirement is a different issue. That's force reduction, and there are long term benefits to that. Including concurrent receipt (unless they changed things) as well as a few others.
It's all a numbers game.
If I had my druthers, I would scrap the entire retirement system and just give everyone 2.5% basepay per year served and be done with it. No high 3. No 20 year mark. No TSP match. Just 2.5% * years served * Basepay when you get out, not subject to inflation. It becomes a "non-coercive" retirement system at that point. If you serve 10, you can retire as an E5-E6 with E5-E6 pay with 25% of your pay. It ain't much, but it's something. No concurrent disability. Just like regular retirees. So if your disability is "equal or higher" it becomes tax free.
Now, the 15 year retirement is a different issue. That's force reduction, and there are long term benefits to that. Including concurrent receipt (unless they changed things) as well as a few others.
It's all a numbers game.
If I had my druthers, I would scrap the entire retirement system and just give everyone 2.5% basepay per year served and be done with it. No high 3. No 20 year mark. No TSP match. Just 2.5% * years served * Basepay when you get out, not subject to inflation. It becomes a "non-coercive" retirement system at that point. If you serve 10, you can retire as an E5-E6 with E5-E6 pay with 25% of your pay. It ain't much, but it's something. No concurrent disability. Just like regular retirees. So if your disability is "equal or higher" it becomes tax free.
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All I can say is that I'm glad that I have already retired... There's quite a few issues with this program that will not be beneficial to many in the future...
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They need to adjust their own retirement plans and see how they like it before screwing around with ours. Let them cut their own benefits and then see if they still want to cut ours.
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It seems that a change to our retirement is ineveitable (but congress and the president still get a very hardy retirment for a single term in office).
Maybe Congress and the Presidents Retirement should be tied to ours, one enlistment/term X% and it increases with each contract/term until 20 years and then you do not get anymore % for anyting beyond that only the pay you are earning?
Just something to think about not a hard stand for me.
http://warontherocks.com/2015/03/military-retirement-too-sweet-a-deal/?singlepage=1
Maybe Congress and the Presidents Retirement should be tied to ours, one enlistment/term X% and it increases with each contract/term until 20 years and then you do not get anymore % for anyting beyond that only the pay you are earning?
Just something to think about not a hard stand for me.
http://warontherocks.com/2015/03/military-retirement-too-sweet-a-deal/?singlepage=1
Military Retirement: Too Sweet a Deal? - War on the Rocks
Retiring from the U.S. military is a sweet deal for the 17 percent of veterans who are allowed to serve for twenty years on active duty. Too sweet. For dec
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