New retirement proposal bad for grads?

Discussion in 'Life After the Academy' started by Maplerock, Sep 29, 2015.

  1. Maplerock

    Maplerock Proud to be an American

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    At first glance it looks like the agreed upon but not yet in effect proposal may be less lucrative for current cadets and midshipmen if they choose to make the military a career.

    Is it bad for them?

    And... since it takes effect on Jan. 1, 2018, would current academy students be under the old plan since they have been receiving military pay and benefits since Induction?

    Example: would 2018 grads be eligible to stay under the current plan?
     
  2. frenzymando

    frenzymando Banned

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    People are pushing for the new retirement plan because it saves money, so it definitely won't be in the best interest of people in the military.

    Cadets(and their Navy/Marines equivalents) that are C/4Cs or C/3Cs on Jan. 1, 2018 will receive the new plan. Cadets that are C/2Cs or C/1Cs on Jan. 1, 2018 will receive the old plan. I'm not sure if this holds true for prior enlisted cadets too.
     
  3. MemberLG

    MemberLG Member

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    I think some unions said the same thing before their companies went ouf of business.

    It is not just simple as saving money and short changing military personnel. Folks like you and me have our opinion, but folks at the DoD have to prioritize their finite resources to keep the DoD functioning to defend our country. If DoD buget is $500 billion, $100 billion goes to cover retirement, there is $400 billion left over for other things. If the overall budget doesn't change, the retirement cost goes up to $150 billion, there is $350 billion left over for other things.

    We can always reduce ROTC schoarships, close down service academies, reduce flying hours, defer maintenance, and etc to pay for increasing retirement cost.

    What do we owe our veterans, including myself, for their service? I don't recall signing any binding contract with specified amount of retirement benefits with a rider for no reduction when I decide to serve. Don't get me, if I get less benefits I won't be happy. But I am not going to cry about it.
     
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  4. kinnem

    kinnem Moderator

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    The corporate world went through this exercise over the past 15-20 years. Time DoD caught up. The new plans have pros and cons. Everyone's opinion will differ as there is no right answer.
     
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  5. cb7893

    cb7893 Member

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    MemberLG x 1000.
     
  6. NavyHoops

    NavyHoops Moderator

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    Since the majority of military members don't serve 20, this is a good deal for those. For those who do serve 20, I would need to do more research. I am one of those who would prefer to be in control of money, vice the government.
     
    Last edited: Sep 30, 2015
  7. cb7893

    cb7893 Member

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    Here is my answer if DS asks my opinion. "Don't worry about it. Get your a$$ to church and give thanks for your well-earned good fortune. You are happy, excited about your future and debt free". Have a competent financial advisor scrutinize the longterm savings options. Don't take out that big loan they offered you unless it is to pay off higher interest loans or you can invested it in a fixed income instrument. (He was shocked at the number of brand new cars owned by his BOLC classmates.) Do your job and learn as much as possible as if you want a long career in the military. Save money assuming the Army will turn you loose when you least expect it and when your sixty something you will pay the price of the two previous generations' profligacy.

    What little I have seen, DS is a member of the 1% of new college graduates. He has no debt and the satisfaction of knowing that his parents will have more money to leave him when we die. He has a job. He has a job for from which he probably cannot get fired unless he is utterly stupid. He has gilt-edged health insurance. He doesn't have a sky high salary, but the salary does reflect his compensation. He has matched savings. He has no expenses and he will have none when he heads to Kuwait next year. He will pay no taxes while deployed. In fact, he will be able to invest $10k at 10% for the duration of his deployment. When he leaves the military he will have as strong a resume and skill set as anyone could ask for.

    "Most important, don't conflate good luck and entitlement".

    All of this is written in the context of DS's situation. He is single. He is not a Marine. He is not in combat arms. He is not enlisted. In no way do I conflate his "service" and that of others.
     
  8. Pima

    Pima Parent

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    I truly hope this is true for your family, but as a person watching a parent now living in assisted living that had a very healthy nest egg, you really don't know if this is true. Assisted living will eat through your nest egg every month in the thousands.
    ~ In my family the youngest to die was 91. My grandmother lived until 101. If I die at 91, my kids would be 66, 64 and 62.

    I am with Member, there was no sign on the dotted line. It has always been this is what we promised and want to keep our word.
     
  9. Maplerock

    Maplerock Proud to be an American

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    Wow. Competent financial advisor... is that an oxymoron?

    Today's economy does not bode well for investment growth. Retirees are not maintaining the 4% necessary to sustain their nest eggs.

    That whole post smacked of a privileged situation. Many of our young military people entered the service with dreams of serving and serving selflessly. They had every right to expect a pension after 20 years of service. That is good planning, not expecting a handout. Similar to the hard working Americans that expect social security to be there for them when they retire.

    A military life is one of sacrifice. It is difficult on individuals and even more difficult on families. They deserve the peace of mind that a guaranteed retirement brings. You cannot count on investment income.
     
  10. Pima

    Pima Parent

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    Maplerock,

    Just my opinion, but here goes.

    I doubt that the retirement pay will not take a huge hit. The majority of our elected officials never served, and as time goes by they just won't get it. Not only that, but the majority of them are millionaires.

    I bet if you asked Cruz, Rubio, Reid or Pelosio how many AD military members are on WIC/EBT they could not answer that question without saying I will need my STAFF to research they question.

    I doubt if you asked them what would be the % for a 22 yr member what would be their pay.
    ~ You and I would say 55% of base pay.

    Heck, I doubt they would even know that the day the retiree dies, their spouse loses that retirement pay.

    Don't even get me started on tri-care.

    That is the true problem in my mind. Our elected officials don't get the difference between the military world and the corporate world where they made millions to pay for their campaigns. They are out of touch with us peons.

    I would expect that it will change and the sad part is our elected officials will hit the military retirement structure while they keep their pensions intact as an elected official.
     
  11. cb7893

    cb7893 Member

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    Sure as shootin' my DS and every other newly minted US Military Officer who went to an SA or received an xROTC scholarship on the tax payers' dime is in a privileged situation. I made it clear that, unlike many others', his particular "sacrifice" is minimal. And you know what, the same can be said for a lot of his fellow o-1's. I've practically made it my life's work to make sure he doesn't treat that earned privilege as an entitlement, but rather as something to be earned every day.

    More than once I've read on the SA specific sections about the "network" of graduates to tap into after a military career. They do for a reason and they brag about it.

    My point was to advise these fresh faced 2LT's and Ensigns to pay attention to their jobs and personal finances...and be very thankful for what they have.

    There is much made of the small % of the population that fights wars. Maybe more should be made of the small % of the military that actually does the fighting and the heavy lifting.

    Nowhere did I or anyone else suggest that the pension scheme be changed for those who've been in the system, although given the top heavy civilian and uniformed structure of the DOD, a case could be made...

    Flame away!

    Just call me Giordano Bruno
     
  12. Maplerock

    Maplerock Proud to be an American

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    I can name you many whose sacrifice was definitely not minimal.

    My son's have had "the privilege" of multiple deployments to combat zones including Afghanistan and Iraq.

    They joined to serve, but the expectation was there of a pension at the end of their service.

    I want to nicely say that I think you're full of crap.
     
  13. VelveteenR

    VelveteenR Just gathering dust in the nursery...

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    I'm not sure how you can suggest that all of our children who are at service academies are not privileged for all the reasons cb7893 lists.

    We discussed the potential for benefits erosion with our son. He didn't apply to the military for the retirement benefits; he applied to serve. DH and I are not in careers that provide pensions; we've always known that we will be responsible for supporting ourselves when we step off the merry-go-round and have lived, saved, and invested accordingly even when we had little. We've told our cadet not to expect the government to support him after his service. If he does get anything, that's a bonus. He will follow our footsteps and save his pennies and, hopefully, dollars later. Because he saved us the cost of college, we will be investing the equivalent of his 529 for him to start his nest egg; he will have to supplement the rest. He is an only child. If he outlives us, he will inherit. We also have long-term care policies to ensure we will not become a burden on him. All of these moves are just part of good financial planning.

    It will be nice if our children are fortunate enough to receive some form of pension for their service, but I wouldn't count on it and would plan for the worst.
     
  14. MemberLG

    MemberLG Member

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    As much as we think that all kids join serve, at least for some kids attending West Point based being FFR based on 10 years, many of them didn't even know they had service oblgiation, let along that if they serve 20 years they will get a pension.
     
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  15. cb7893

    cb7893 Member

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    Maple,

    Let me say it clearly:

    My DS's "sacrifice" is minimal and his received benefits are generous. If I can believe the statistics I've read, that is the rule rather than the exception, among newly commissioned SA and ROTC 2LT's and Ensigns. The numbers actually doing the shooting and in harm's way is disproportionately small. Those are the folks I give a damn about and I hope he does to.

    He, too, will deploy to a combat zone in Feb, where his sole "sacrifice" will be separation from alcohol and his GF.

    He has been AD now for about 10 days. If he were to peep about a pension, it would fall on deaf ears.
     
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  16. billyb

    billyb Member

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    I personally think the new retirement plan is a good thing. My worry always is a "change of heart" by the government where they decide to reduce bennies / retirement payouts etc.. and the retirees are totally at their whim. If the money is in my name (and not some big govmt pot) at least I know it is my money and I am in control of it. In the future they might "means test" government pensions. That would be a tragedy IMPO. I also agree with privatizing social security for the same reason.
     
  17. flieger83

    flieger83 Super Moderator Moderator

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    "Heck, I doubt they would even know that the day the retiree dies, their spouse loses that retirement pay."

    Well, that's true however...unless the military member was asleep during their retirement briefs...there is the SBP...up to 55% of the retirement pay. Yes, it's a big cut however it beats "going cold turkey" to zero.

    Steve
    USAFA ALO
    USAFA '83
     
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  18. Pima

    Pima Parent

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    As a spouse of a member that retired in 08. the AF makes every spouse go in and personally sign off too with a benefits counselor. Or at least our base did.
    ~ I recall it very clearly. I was ticked because I was trying to pack out a house to move to another state and I had to do this.
    ~~ They went through everything with me regarding VGLI and if he died the day after retirement I would get squat. It almost felt like they were life insurance agent. Slash investment adviser. Slash health insurance agent.

    It was probably a 2 hr sign here, initial there. It went to the point of how many dependents will you declare for retirement.

    SO, even if they were sleeping through the briefs, if they knew they had a spouse, than it is more than likely that they pulled the spouse in to their final finance briefing from my personal experience.
     
  19. MabryPsyD

    MabryPsyD Dr. G.

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    I don't have a gripe about future servicemembers being forced into the new plan. They would know what they're signing up for as far as benefits are concerned. I just would hate to have the 'ole " bait and switch."
     
  20. raimius

    raimius USAFA Alumnus

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    Indeed!
    The "new deal" might not be as good as the "old deal," but as long as you knew what it was when you signed on, it is not a broken promise.
    I think we'll need to do similar with Social Security and a few other programs as well. I just hope people realize that in time to get out in front of the problem. If we altered requirements for Social Security for people who have not started working yet, they would have a full career to plan things out. That's much better than telling a 55 year old that their benefits will be delayed 5 or 10 years!
     
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