WheelzUp Posted January 20, 2014 Posted January 20, 2014 Slight derail, but is there any disadvantage to having a lower retired rank than your final active duty rank? I never understood why this 36-month TIG rule would have any effect on retention or any other matters. When it's time to go, it's time to go. Why would someone stay in longer just to have different letters on his retired ID? Dude......it affects your retired pay. 50% of the average of your last 3 years of service, for the rest of your life. Retiring one grade lower will cost you half a million dollars in the long run. I'd call that a disadvantage personally. 5
WABoom Posted January 20, 2014 Posted January 20, 2014 (edited) Using a guy/gal that retires at 20 years with the high 3 years consisting of 2 years as a LtCol and one year as a Major vs 3 years as a LtCol. (O-5 pay)$8,422.20 + $8,422.20 + (O-4 pay)$7,356.60 = $24,201/3 = $8,067/2 = $4,033.50 (50% of base pay) (O-5 pay)$8,422.20/2 = $4,211.10 (50% of base pay) OK obviously not a math major or an expert on the Top-3 retirement sysytem, yet, but it looks like only a difference of $177.60. I think it would take a little over 235 years to lose half a million dollars. Feel free to correct my logic if I am wrong. https://militarypay.defense.gov/retirement/ad/03_highthree.html Edited January 21, 2014 by WABoom
TMFan Posted January 21, 2014 Posted January 21, 2014 Let me ask another way. Sometimes, as a voluntary force shaping tool, USAF waives TIG to 24 months to retire in grade. Does that really motivate anyone to leave the service a year earlier than they otherwise would have? If so, why? What are the advantages to staying in long enough to retire in grade?
guineapigfury Posted January 21, 2014 Posted January 21, 2014 I suspect that the 3 year TIG isn't directed at O-4s, but O-6s. Retire as an O-6 and you're a DV for life. Same thing for Chiefs. I think this is a quiet way for Big Blue to incentivize senior personnel to stick around past 20. 4
Guest Posted January 21, 2014 Posted January 21, 2014 Let me ask another way. Sometimes, as a voluntary force shaping tool, USAF waives TIG to 24 months to retire in grade. Does that really motivate anyone to leave the service a year earlier than they otherwise would have? If so, why? What are the advantages to staying in long enough to retire in grade? I'm not familiar with this program, but I'm guessing this is a top 3 waiver for retirement calculation. If so, I know multiple NCOs who would jump at this, particularly as HYT for E6 is now 20 years, so plenty of recent MSgts could bail at about 21 to 22 years instead. Also, this factors into plenty of E-to-O programs which require extra years to retire in the O category. It could definitely be the deciding factor for some folks. 1
sputnik Posted January 21, 2014 Posted January 21, 2014 Dude......it affects your retired pay. 50% of the average of your last 3 years of service, for the rest of your life. Retiring one grade lower will cost you half a million dollars in the long run. I'd call that a disadvantage personally. I don't think you understand math. The question was, if you retire as an O5 with only two years in grade....what's the practical effect? It has zero effect on your retirement income, it means your retired ID card says says you're a major. 1
panchbarnes Posted January 21, 2014 Posted January 21, 2014 I don't think you understand math. The question was, if you retire as an O5 with only two years in grade....what's the practical effect? It has zero effect on your retirement income, it means your retired ID card says says you're a major. Who would the regular American believe more on Fox/CNN? Maj John Doe or Lt Col John Doe? 3
SocialD Posted January 21, 2014 Posted January 21, 2014 Who would the regular American believe more on Fox/CNN? Maj John Doe or Lt Col John Doe?I don't think the regular American would know the difference. 3
BitteEinBit Posted January 21, 2014 Posted January 21, 2014 Who would the regular American believe more on Fox/CNN? Maj John Doe or Lt Col John Doe? The problem with regular Americans is they believe EVERYTHING they see on TV.
sputnik Posted January 21, 2014 Posted January 21, 2014 Who would the regular American believe more on Fox/CNN? Maj John Doe or Lt Col John Doe? I don't know. He made a statement that retiring in a lower grade would have a huge effect on your retired earnings. That isn't true.
busdriver Posted January 22, 2014 Posted January 22, 2014 A retired O-6 stands to make a lot more in the defense industry if he negotiates correctly.
HeloDude Posted January 22, 2014 Posted January 22, 2014 A retired O-6 stands to make a lot more in the defense industry if he negotiates correctly. How could he not negotiate correctly?? He was an O-6, which clearly means that he is superior in each and every way compared to the vast majority of others.
busdriver Posted January 23, 2014 Posted January 23, 2014 I know at least one retired O-5 who did better than his friend that retired as an O-6. I plan to talk to that O-5(ret) during my exit strategy development. As he said, he's making "silly money." He also said, given what he makes he has no question as to why defense programs cost so much these days. Yes, I'm a hypocrite.
hindsight2020 Posted January 23, 2014 Posted January 23, 2014 I know at least one retired O-5 who did better than his friend that retired as an O-6. I plan to talk to that O-5(ret) during my exit strategy development. As he said, he's making "silly money." He also said, given what he makes he has no question as to why defense programs cost so much these days. Yes, I'm a hypocrite. Don't worry. We're all rent seekers in this life... /cynic
ClearedHot Posted January 23, 2014 Posted January 23, 2014 Dude......it affects your retired pay. 50% of the average of your last 3 years of service, for the rest of your life. Retiring one grade lower will cost you half a million dollars in the long run. I'd call that a disadvantage personally. Incorrect dude. it is called "High 3", not "Last 3". You retirement computation will be based on your highest three years of pay. The only real impact is what it says on your DD214 and your ID card.
OverTQ Posted January 23, 2014 Posted January 23, 2014 The people you know and can influence that are still in making decisions about future projects are the value in post military life. The jobs in the five sided puzzle palace that everyone openly eschews, those guys are often the ones you see at the conferences a year later wearing a business suit talking to their uniformed buddies. I think knowledge of key acquisition systems and the players involved are worth more than then rank in most cases.
pawnman Posted January 24, 2014 Posted January 24, 2014 Incorrect dude. it is called "High 3", not "Last 3". You retirement computation will be based on your highest three years of pay. The only real impact is what it says on your DD214 and your ID card. So two years of LTCol pay and one year of Major pay average out to the same as three years of LtCol pay? Interesting.
ThreeHoler Posted January 24, 2014 Posted January 24, 2014 So two years of LTCol pay and one year of Major pay average out to the same as three years of LtCol pay? Interesting. No, but it won't cost you 1/2 million dollars.
WheelzUp Posted January 24, 2014 Posted January 24, 2014 No, but it won't cost you 1/2 million dollars. So I was referring to a passed over Major vs a Lt Col at 20 yrs, which will in fact cost you that much. I see now that the question was in regards to being shorted one year in grade, thereby making the impact on your three year average much lower. Still significant IMO.
C-21.Pilot Posted January 24, 2014 Posted January 24, 2014 I'll retire as a Major -- have figured out the math, and it is in no way close to 1/2 million dollars. I'm no financial wizard, but I simply don't see a way to get to a $500K difference. Assume: 1. ZERO inflation 2. 25% tax rates.... 3. Retire at 20 yrs exactly - so you don't get the "over 20 pay scale" 4. Based on 2014 pay charts 5. Life expectancy = 85 yrs old 6. Retirement age = 42 Maj - 7280.70 for 12 months (87368.40) 7356.60 for 24 months (176558.40) Average over 36 months = $7331.30 x 50% = 3665.65 x .25% (916.41) = 2749.24 (month) x 12 = 32990.88 in annual retirement x 43 years life expactancy = $1418607.84 lifetime **************************** Lt Col 7974.00 for 12 months (95688.00) 8199.30 for 24 months (196783.20) Average over 36 months = $8124.20 x 50% = 4062.10 x 25% (1015.53) = 3046.57 (month) x 12 = 36558.84 in annual retirement x 43 years life expactancy = $1572030.12 DIFFERENCE: $1572030.12 - $1418607.84 = $153422.28
Bender Posted January 24, 2014 Posted January 24, 2014 DIFFERENCE: $1572030.12 - $1418607.84 = $153422.28 Now figure in the compounding interest of investing that extra $297.33 a month over 43 years. I still don't think you'd get to $500k, but you'll get closer. Bendy
C-21.Pilot Posted January 24, 2014 Posted January 24, 2014 Now figure in the compounding interest of investing that extra $297.33 a month over 43 years. I still don't think you'd get to $500k, but you'll get closer. Bendy Agreed….by my public math -- just north of $376K
waveshaper Posted January 29, 2014 Posted January 29, 2014 It seems the gang of four (14 stars)that "came out" in support of the 1% COLA reduction may have kicked the hornet's nest. Is this blowback or legitimate/expected reaction or something else?https://www.airforcetimes.com/article/20140129/NEWS05/301290016/Pentagon-will-review-higher-pensions-top-officers
Fuzz Posted January 29, 2014 Posted January 29, 2014 It seems the gang of four (14 stars)that "came out" in support of the 1% COLA reduction may have kicked the hornet's nest. Is this blowback or legitimate/expected reaction or something else?https://www.airforcetimes.com/article/20140129/NEWS05/301290016/Pentagon-will-review-higher-pensions-top-officers Karma, they advocated screwing others and subsequently highlighted themselves and their ridiculous good deal.
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