H Zj Res 59 2014 Federal Budget

Discussion in 'Academy/Military News' started by Eagle, Dec 12, 2013.

  1. Eagle

    Eagle Member

    Joined:
    Jan 22, 2009
    Messages:
    66
    Likes Received:
    0
    Can anyone explain how this budget affects pensions for military personnel who may be approaching their 20 years. Is it true that it reduces their pension until they are 62 yo. Promise Broken??
     
  2. EDelahanty

    EDelahanty Member

    Joined:
    May 7, 2010
    Messages:
    1,273
    Likes Received:
    312
    It looks like they are planning to do just that. The further you are from 62, the bigger the cumulative hit.

    http://www.military.com/benefits/20...-hits-retirees.html?comp=1198882887570&rank=3

    Also, pay raises for military next year will be 1.0% instead of the previously planned 1.7%.
     
  3. Stevewar2

    Stevewar2 Member

    Joined:
    Oct 7, 2013
    Messages:
    238
    Likes Received:
    0
    Pay

    I love it. I'm 52, so I lose up to 1%/year for 10 years. I must have missed that briefing at Fort Know back in 1979. I am not employed and 100% VA disabled, but I'm working age. Yee Haa Still a great retirement, but not what I was sold. Next will be the 200% increase in my Tricare.
     
  4. Pima

    Pima Parent

    Joined:
    Nov 28, 2007
    Messages:
    12,796
    Likes Received:
    930
    What will be interesting to see is the long term impact. Will younger AD bolt at a higher rate, especially if the economy can get back to a 6% unemployment rate like it was a decade ago.

    The idea that they are seeing a loss of pay, on top of an increase for Tri-Care for O5s coming up for retirement, makes staying less desirable for those that may be O4s and 10 yrs left with multiple tours in the Sandbox already under their belt. Plus they know that there will probably be at least 3 or 4 more moves before retirement, and now they have kids, a mtg, a different life than when they were 22 and took the oarh.

    Add into the equation that Commissaries are on the hit list too. Retirement benefits aren't looking so sweet, if they see leaving at 34 and using those yrs to invest on a company sponsored 401K.
     
  5. LineInTheSand

    LineInTheSand USCGA 2006

    Joined:
    Nov 25, 2007
    Messages:
    8,749
    Likes Received:
    1,002
    It's hard to feel bad for a person who can RETIRE at 40 years old.

    Broken promises? Absolutely. By Uncle Sam's been writing checks we can't cash for some time. This is just one of the areas. Social Security is the big mother of all blank checks, but that nasty storm is coming.... to us all. :thumbdown:
     
  6. MedB

    MedB Parent

    Joined:
    Dec 26, 2012
    Messages:
    593
    Likes Received:
    116
    I'm not sure the number of six-figure wage earners, with advanced degrees (mostly funded by government $), that will have to seek lucrative jobs on the outside because they can only afford to partially retire at age 42, is the big concern.

    Now before you jump, remember I grew up military and have two kids looking to commission. Respect, bordering on awe, for our military was the standard in our home. And I believe those that serve earn what they receive and then some.

    I'm just saying that 04s/05s that choose to leave will probably be just fine one way or the other. It's the rank and file military I worry will be hardest hit.
     
  7. LineInTheSand

    LineInTheSand USCGA 2006

    Joined:
    Nov 25, 2007
    Messages:
    8,749
    Likes Received:
    1,002
    I don't doubt that this will hurt people. And I don't doubt that cutting Social Security coverage ore delaying the retirement age would hurt people. Actually I think the only reason Social Security hasn't been attacked (but should have been long ago) is the fear of a backlash from old people (who vote).

    It will definitely hurt.... but it kind of has to. It's hard to avoid that now.

    On the other side of that, the military's retirement system is just messed up. You could serve 20 years, leave at age 40, collect retirement AND work? And correct me if I'm wrong, but continue to collect military retirement while working in a federal civilian position?
     
  8. cb7893

    cb7893 Member

    Joined:
    Dec 6, 2011
    Messages:
    1,054
    Likes Received:
    377
    lits x 1000
     
  9. MedB

    MedB Parent

    Joined:
    Dec 26, 2012
    Messages:
    593
    Likes Received:
    116
    Again, I don't begrudge our 20 year vets a retirement benefit. After all, let's remember they EARNED this. Not only for their sacrifices, but that of military families. From my own youth...

    * I remember us moving 13 times in one 6 year period; including 3 different kindergartens
    * Countless missed holidays and family events/firsts
    * The constant worry for health and safety of a parent
    * The phone calls at odd hours where he simply had to go, and bringing clothes/food because he was working straight through for days on end
    * Being transferred to places so rough and crime ridden that my mom actually bought a carried a gun because she was so afraid for our safety
    * Selling both family cars on short notice (at a loss) to buy a single one because govt would only ship one to Hawaii, then orders changed again at 11th hour and not go afterall.
    * Having our phones tapped and FBI coming to my school and outside our home
    * And on and on and on....

    Sometimes we forget that sevice members and their families face hardships that civillians simply do not endure. So again I say they've EARNED this "benefit"; especially given that the AD pay is simply on-par (at best) with the civillian world.

    My point is that we shouldn't cry over the 05s impacted by cuts. Yes it will hurt, but they will be just fine. Instead, think about the broader military and what these cuts mean to those families.
     
    Last edited: Dec 13, 2013
  10. DHinNH

    DHinNH USMA 1989

    Joined:
    Mar 23, 2011
    Messages:
    190
    Likes Received:
    0
    So, cut the budget, just NIMBY?
     
  11. tankercaptain

    tankercaptain Member

    Joined:
    Jun 28, 2012
    Messages:
    479
    Likes Received:
    9
    The proposed cuts to pension costs are for military retirees who aren't disabled and not yet 62 years old and then are restored to current levels at 62 years old.
     
  12. Pima

    Pima Parent

    Joined:
    Nov 28, 2007
    Messages:
    12,796
    Likes Received:
    930
    Why would someone with 10 yrs in, has a Masters in hand thanks to TA, stay for another 10 yrs, or 3-4 moves at least while enjoying only a 1-2% annual pay raise, and watching their retirement bennies erode?

    They could go corporate with a company that matches their investment via a 401K program at 32, at a comparable salary, never move again, and never have to do a no-notice deployment of 6-12 months. Nor do they have to worry that upon their death, the surviving spouse will need to have another financial investment (i.e. insurance) to pick up the financial loss. If Bullet dies tomorrow, come Jan. I will not get a penny from the AF regarding that retirement pay. In a way it is a financial crap shoot.
    ~~~ Most retirees know this and during their career plan accordingly, using companies like 1st Command and USAA for investment purposes.

    So when you say NIMBY, yes, if they are smart it should be NIMBY for those serving, because if they want to keep their personnel assets in the O3 rank than they need to re-think this idea IMPO.

    I am laughing because my Mom always said the wheel is round when she talks about life. I am seeing that for the military the wheel is a 20 yr cycle.
    ~ 92/93 RIF/SERB
    ~~~ Economy stunk, and we were leaving the sandbox (Gulf 1).
    ~ 1-2% annual pay increases
    ~ 96/97 Messed with benefits...can we say Tri-Care Prime/Std and the High 3 retirement ?
    ~ 96 (?) pilot bonuses jumped by tens of thousands (AF)

    Sound familiar?

    What happened 2 yrs later starting in 98? So many left that were sr O3, or young O4 (early 30's) they were forced to do the following:
    ~ They offered certain ranks annual pay increases of 10% for several yrs. Mainly those that were hollowed out during the RIF.
    ~ They said if you want to homestead, it can happen.
    ~ Offered 6 figure bonuses to WSO's :eek: aka CSO's now
    ~ Started their own variation of a no-match 401 K.

    We are at the 92/93 portion. Budgets need to be cut, and they will be cut, but if history is a predictor, be prepared that in 5-10 yrs we, as taxpayers will be paying for it again, and every penny saved will now be 2 pennies spent.
     
  13. Packer

    Packer Member

    Joined:
    Feb 11, 2011
    Messages:
    1,877
    Likes Received:
    5
    Well at age ~42 he would "retire" with 50% of basic pay, ~$50k/yr in todays dollars. So in that 10 year period between 10 and 20 year he would collect $500k in retirement benefits. A 401k only allows a max deferment of $17,500/yr so even if a company matched 100% and I am not aware of any that are currently being that generous but I am sure there are some, he would only receive $175,000 in retirement benefits in the private sector. This is definitely a simplified analysis that isn't including rate of return, inflation, opportunity costs, etc but $500k to $175k is a pretty big difference and the differerence will continue to grow after the 20 year point but at a slower rate.

    If I am missing something key, I am sure I will be enlightened but only looking at the dollars it certainly seems the retirement benefits would be significantly greater by staying in.

    I am not a proponent of the propsed cut but I see the current system being pretty hard to defend today.
     
  14. navy83

    navy83 Member

    Joined:
    Jan 14, 2012
    Messages:
    36
    Likes Received:
    0
    Pima,

    I have a Ph.D. from a top engineering school and a law degree. Have worked for 30 years in industry and have completely funded my own retirement. I will retire comfortably because I am an excessive saver - many I know with similar backgrounds will not. My Ph.D. and law degree were not funded by the government in ANY way. It is not as rosy as you believe in the private sector - in essence you eat what you kill.

    You point to 1-2% annual pay increase but I believe you are not taking into account longevity step increases? Figure out what that is costing the government over time. I suspect if you look at what the military is making today and what they made 15 years ago - it probably exceeds inflation by a long shot. Why is that and why should it? I'm a former Naval reserve officer (no pension) and adjustments need to be made throughout government including the military.

    The private sector for the past 15 years on the other hand have seen much smaller raises, large increases in their healthcare contributions and elimination of their pensions. We are becoming a society of haves and have nots. The haves work for the government and the have nots work in the private sector. In my opinion this is not good.

    Anyways hopefully this is a respectfull response to some of your questions. I always appreciate the back and forth.
     
    Last edited: Dec 13, 2013
  15. LineInTheSand

    LineInTheSand USCGA 2006

    Joined:
    Nov 25, 2007
    Messages:
    8,749
    Likes Received:
    1,002
    I would content, they haven't EARNED this.... they've just been promised it (the two are not the same.) I'm sure we can also remember things we've been promised that we never got or can name a number of federal actions that broke promises.

    The civilian world has the same kind of "hardships."

    I don't think anyone said the cuts wouldn't hurt families either. They will. They will hurt the service member and his/her family. Yep. And it will cause some of them to question if they should stay in the military (and sometimes, given the changes, the answers will be no, which is, by the way, how many people decide employment).

    And at the end of the day, if enough service members say no, the government will have to find ways to retain folks.
     
  16. LineInTheSand

    LineInTheSand USCGA 2006

    Joined:
    Nov 25, 2007
    Messages:
    8,749
    Likes Received:
    1,002
    My pilot classmate stopped by for lunch today. I make more money than he makes. I have a master's degree. He has wings. Why would he stay in to 20, instead of taking the dive?

    Well, for one, it's not as cushy in the private sector as military folks believe. You eat what you kill, as has been said, but you can also be eaten.

    But beyond the money and the 401(k)....

    something tells me he ENJOYS picking up people who are on the verge of death in his orange flying angel. Something tells me the controls of his helicopter over the North Atlantic get his heart pounding a little more than the keyboard of my dark wood desk.

    Yes, I make more money. But I'm not convinced it was ever entirely about the money. Sometimes it's also about service. It's about saving a life, arresting a bad guy, saving a sealion or scrapping a buoy. I can promise you his sea stories will get more heads turning at the bar than my office gossip.
     
  17. flieger83

    flieger83 Super Moderator Moderator

    Joined:
    Jul 26, 2008
    Messages:
    2,852
    Likes Received:
    342
    Blast it...

    Where's my "LIKE"" button???

    Steve
    USAFA ALO
    USAFA '83
     
  18. MemberLG

    MemberLG Member

    Joined:
    Jan 4, 2011
    Messages:
    2,807
    Likes Received:
    444
    I think we are forgetting something - why should young people serve in the military?

    For benefits, for adventure, for money, for retirement benefits . . . .

    From my personal experience, younger generation don't think about retirement. One thing I do during retention counseling for my NG soldiers are their retirement benefits - for one weekend a month, two weeks during summer, plus some extra days, the NG retirement benefit is pretty good - most soldiers getting out don't care about what they will lose in retirement benefits.

    Personally, I am okay with whatever I will get for retirement benefits I will end up getting as I don't remember signing any contract with exact details on my retirement benefits.
     
  19. raimius

    raimius USAFA Alumnus

    Joined:
    Jun 9, 2006
    Messages:
    2,236
    Likes Received:
    272
    Well, at least some people plan out their retirement funding well ahead of time. Getting the pension reduced (in purchasing power) kind of throws that for a loop, and at a fairly advanced stage of the game, if you are already retired military.

    I'm hoping to get something decent, if I make it to 20. I'm not sure my age group will be able to count on either military pension or social security at all, at this point.
     
  20. MedB

    MedB Parent

    Joined:
    Dec 26, 2012
    Messages:
    593
    Likes Received:
    116

    earn 1 (ûrn)
    tr.v. earned, earn·ing, earns
    1. To gain especially for the performance of service, labor, or work: earned money by mowing lawns.

    2. To acquire or deserve as a result of effort or action: She earned a reputation as a hard worker.

    3. To yield as return or profit: a savings account that earns interest on deposited funds.


    Lits, by your definition, you don't "earn" your paycheck either then. You are simply promised it, right?

    You've agreed to perform a job in exchange for compensation package paid mostly in the future (next pay period, next year bonus, next decade stock option, etc). So if your employer decides this month not to provide part of that agreed upon compensation (oh say... your paycheck?), then I'm sure you will take your own medicine and say "Oh well, it's just a broken promise". Right?
     
    Last edited: Dec 14, 2013

Share This Page