Military retirement under attack

[Fuzz]

There is one good study on just this question (there are lots of good studies on retirement reform...again this is nothing new and has been going on since 1948). You would be surprised at the opinions of your fellow .mil members.

https://www.csbaonline.org/publications/2012/07/rebalancing-military-compensation-an-evidence-based-approach/

Nothing surprising given our current fiscal climate (as a government and population). The average joe has demonstrated that the "here and now" is more important than the future by the way most people spend money or vote others to spend money (especially money neither they nor the government has); in addition fail to save or prepare for the future/retirement. Unfortunately the military is not immune from this line of thinking either. Also most members of the military don't have the benefit of seeing what those long term programs actually mean further down the road, growing up with Tricare from my parents was a huge financial benefit for them especially with kids, as well as them pulling in a pension while working full time. Unfortunately most young people's only concern (military or civilian) when it comes to finances deals with balancing partying with bills so they can eat for all 31 days of the month.

[Ram]

Surely there are many moving parts here, but I think we can all agree on two things:

1. If Congress wants to change military retirement, they need to lead from the FRONT and make SWEEPING changes to their OWN pay/retirement system first.

2. Number 1 will never happen.

[Fifty-six & Two]

Lower COLA increases.

Sent from my iPhone using Tapatalk

Yup. This is the only thing I could find in summaries about military retirement being targeted.

Annual adjustment of retired pay and retainer pay amounts for retired members of theArmed Forces under age 62

This provision modifies the annual cost-of-living adjustment for working-age military retirees by making the adjustments equal to inflation minus one percent. This change would be gradually phased in, with no change for the current year, a 0.25 percent decrease in December 2014, and a 0.5 percent decrease in December 2015. This would not affect service members who retired because of disability or injury. Service members would never see a reduction in benefits from one year to the next

Edited December 11, 2013 by Fifty-six & Two

[ThreeHoler]

Not a stats or math major, so I may have done this wrong.

This chart shows O-5 retirement under the current system as compared to REDUX (which no one should ever take) and the proposed COLA changes. I pushed retirement out to 2016 to show the overall effect of COLA = CPI - 1. Total retired pay (assuming living to 79 years) is reduced by roughly $128,000.

Edit: corrected chart based on updated information. CPI - 1% from retirement to 61. Adjusted to full "original" retirement at 62 and CPI from there.

Edited December 12, 2013 by ThreeHoler

[Champ Kind]

They will do as much tinkering as they can without actually "changing" retirement.

To all the new guys reading: if you are just planning on using your mil pension as your retirement, you're wrong. Start maxing out a Roth IRA and/or your TSP *yesterday*!

[mcbush]

To all the new guys reading: if you are just planning on using your mil pension as your retirement, you're wrong. Start maxing out a Roth IRA and/or your TSP *yesterday*!

Already done, but guys aren't stopping there. I have nine years left on my UPT ADSC as of this week. Know what the all the new copilots are talking about around the office? The ATP written exam.

[Pajaro]

ThreeHoler, your chart is pretty close, but it the new plan calls for the COLA to be reduced for retirees only until age 62. After that the COLA goes back to the full rate. My math shows that a Lt Col who retires in 2018 with 20 years service (me, for example) will lose $372000 in lifetime pension payments by age 85 with the new system. I've already written my congressman to urge voting this down because it is a huge amount of money to wring out of retirees.

[ThreeHoler]

Yes, COLA goes back to full rate. My numbers also assume a 1% pay raise per year on AD for the next three years (as opposed to the mandated ~1.8%) and a 3% CPI (based on the average CPI for the last 100 years).

Edit: corrected chart based on better description of the cut. ~$128K reduction from retirement to age 62.

Edited December 12, 2013 by ThreeHoler

[Karl Hungus]

Already done, but guys aren't stopping there. I have nine years left on my UPT ADSC as of this week. Know what the all the new copilots are talking about around the office? The ATP written exam.

Careful, Liquid will be around any minute now to give you a no-notice ground eval.

[ThreeHoler]

Great news, everyone!

If you stay in to 24 years as an O-5, you could retire under the new changes with the same (well, $108K better) total retirement income that an O-5 with 20 years can retire under the existing rules.

[Champ Kind]

LOL

[Pajaro]

If you like your military retirement plan, you can keep your military retirement plan. Oh, wait....

[Champ Kind]

If you like your military retirement plan, you can keep your military retirement plan. Oh, wait....

"...you just have to serve longer..."

[Fuzz]

If you like your military retirement plan, you can keep your military retirement plan. Oh, wait....

The duffel blog does it again:

https://www.duffelblog.com/2013/12/obama-military-cuts-like-job-can-keep/

[matmacwc]

Surely there are many moving parts here, but I think we can all agree on two things:

1. If Congress wants to change military retirement, they need to lead from the FRONT and make SWEEPING changes to their OWN pay/retirement system first.

2. Number 1 will never happen.

You had the stupid beer tonight. Obamacare doesn't really effect congress, why do you think retirement will be any different?

Disclaimer: I know they might fall under O-Care, but they have a 70% something discount......F them.

[Pajaro]

Yes, COLA goes back to full rate. However, since each new year's pay is last year's pay adjusted by the COLA, the years from 62 to death will track at CPI but never catch up to the current plan as there is no one-time adjustment at 62 like the REDUX plan. My numbers also assume a 1% pay raise per year on AD for the next three years (as opposed to the mandated ~1.8%) and a 3% CPI (based on the average CPI for the last 100 years).

It looks like there is a catch up at age 62, so although a kick in the balls, it´s not as bad as it could be. Anyway, this plan simply makes my blood boil. Here´s the text from the bill:

“(D) REVISED ADJUSTMENT UPON REACHING AGE 62.—When a member or former member whose retired pay has been subject to adjustment under this paragraph becomes 62 years of age, the Secretary of Defense shall recompute the retired pay of the member or former member, to be effective on the date of the next adjustment of retired pay under this subsection, so as to be the amount equal to the amount of retired pay to which the member or former member would be entitled on that date if increases in the retired pay of the member or former member had been computed as provided in paragraph (2) or as specified in section 1410 of this title, as applicable, rather than this paragraph.

The entire bill is at: https://docs.house.gov/billsthisweek/20131209/AMNT-113-HJRes59sa-1R.xml#toc-H8C039B43CF3F48C0A8BF11CD9720FF81

For reference, here´s paragraph (2) from Title 10, section 1401 (this is the paragraph (2) referenced in the amendment in the proposed bill)

(2) Percentage increase.— Except as otherwise provided in this subsection, the Secretary shall increase the retired pay of each member and former member by the percent (adjusted to the nearest one-tenth of 1 percent) by which—

(A) the price index for the base quarter of that year, exceeds

(B) the base index. .

I also want to note that this has very little effect on 3 and 4 star generals who retire very close to age 62 and won´t receive many years of the reduced COLA penalty. It punishes only the cogs in the machine.

edited for clarity

Edited December 12, 2013 by Pajaro

[NotADude]

If I didn't have zero faith in AFPC's ability to make long-range decisions, I would almost think this was timed to hit the news right when they were announcing new FY14 Force Management programs. Raise your hand if you want out now!

[ThreeHoler]

Made some edits based on additional information stating that the COLA would return to "annual pay that the member would have if they were under the current plan at 62" and then track CPI until death. Roughly $128K reduction from retirement to 62 years.

[Homestar]

Can someone explain this to me like I'm 5 years old?

[Champ Kind]

Can someone explain this to me like I'm 5 years old?

If this bill is passed you will get less money as a military retiree.

[Ram]

November 2014 I'm voting against every single incumbent. 33 Senators and 435 Representatives will be up for re-election, and the American public needs to un-sheep themselves and send a message.

“The willingness with which our young people are likely to serve in any war, no matter how justified, shall be directly proportional to how they perceive veterans of early wars were treated and appreciated by our nation."

- President George Washington

It disgusts me to see our Congress failing to lead by example. Austerity regarding their own benefits and salaries, regardless of how minor the effect would be on the overall fiscal picture, would at least be a start. This Congress continues to ask for more austerity from its citizens without accepting or sharing any of that burden itself. I'm beginning to wonder who works for who.

[Champ Kind]

Yet the news is celebrating the passage of this bill in the House as a hallmark of cooperation.

[pcola]

Yet the news is celebrating the passage of this bill in the House as a hallmark of cooperation.

It's kind of like how the AF can make life suck so much, that when they take a couple of steps back in the direction of normal, it seems like a huge win (see the "what has improved in the AF thread.)

Congress has made such an epic clusterfuck of things lately, that any cooperation at all is being hailed as a huge victory, regardless of how shitty the end result actually is. If not for my complete lack of faith in any actual ability of congress to develop a coherent strategy, it would seem like they actually executed a savvy strategy.

Entitlement benefits continue their upward trend, at the expense of those very few who actually make the sacrifice to guarantee that the majority can continue to receive benefits from their government. Spending isn't really cut, taxes actually do go up, and the deficit sees no immediate relief. This should be no surprise, because it is what the majority wants. It is what they voted for, after all. Like the saying goes, you can't fix stupid. It looks like the scales have tipped, and the majority of Americans now fall into that "stupid" category.

[JS]

Already done, but guys aren't stopping there. I have nine years left on my UPT ADSC as of this week. Know what the all the new copilots are talking about around the office? The ATP written exam.

So did you tell them that they they should focus on their primary Lt copilot duties of getting a master's and completing SOS for the first of four times???? You need to set these kids straight these days, jeeez.

[AnimalMother]

They will do as much tinkering as they can without actually "changing" retirement.

To all the new guys reading: if you are just planning on using your mil pension as your retirement, you're wrong. Start maxing out a Roth IRA and/or your TSP *yesterday*!

Be careful with this one too, the good comrade has already expressed his feelings on "excessively" large deposits in IRAs. Furthermore, the TSP is one of the first places they will pilfer from, they've already done it twice. Why would you need a TSP or IRA if you're already getting a military pension? Diversify...