Battle over Military Pay

Stealth_81 said:
Not a good comparison because there are no law enforcement jobs available without a 4-year degree anymore, at least in my neck of the woods. Even in the fire service they are looking for a bachelors degree for entry-level firefighters. Also, in my department there is no 20 years and done retirement. You can retire at 52 if you have at least 20 years in, but it will not be anywhere near 50% of your final base salary (more like 25%). Most people will have more than 20 years in to retire. I will retire next year at 52 (or maybe in two years at 53, haven't decided, yet) with 27 years of service and I will be looking at a pension in the 35-40% range. Different areas will have different pension plans dependent on what the contract says.

Stealth_81
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My best friend and I were considering joining the FBI after our 4 year active duty time was over. We passed the background checks and took the exam at one of their local field offices. Then we learned how much they earned...

O-2 with BAS and BAH > GS-10

Needless to say, we continued our military service.
 
Stealth_81 said:
Not a good comparison because there are no law enforcement jobs available without a 4-year degree anymore, at least in my neck of the woods. Even in the fire service they are looking for a bachelors degree for entry-level firefighters. Also, in my department there is no 20 years and done retirement. You can retire at 52 if you have at least 20 years in, but it will not be anywhere near 50% of your final base salary (more like 25%). Most people will have more than 20 years in to retire. I will retire next year at 52 (or maybe in two years at 53, haven't decided, yet) with 27 years of service and I will be looking at a pension in the 35-40% range. Different areas will have different pension plans dependent on what the contract says.

Stealth_81
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Wisconsin is very much that way, but where I live I know of a city police force (~40 officers) near my home that does not have 1 single officer with a 4-year degree, including the chief.

Of course, the pay scale here is about 1/2 of what was reported earlier. Needless to say, there are plenty of stories about LEOs at in several agencies who succumb to outside financial interests... You get what you pay for.
 
Maybe I'm participating in a different kind of 401(k), but I like my 7% matching. And any saving is better than no saving. You have folks coming out of the military with 10 years in and NOTHING in retirement savings. TRUE, they COULD just do it on their own, but matching helps and a systematic approach by the employer makes it easier too.

No one wearing a uniform is "hourly" so let's throw that argument out now.

I have no doubt, as Bruno has mentioned, that the 20 year thing is a retention device. It does nothing to make the services better. It's a "let's keep some bodies." But that comes at a price. People hit 20 and run. Not all.... but some. The motivation for those years leading up to 20? Hit 20. This isn't news to ANYONE here. How many of us worked with guys or gals who were at 15... thinking about leaving and said "might as well stay to 20." It helps the number game, but does nothing for leadership issues in each service.

I'm tired of the "we don't do anything to support the military." The VAST MAJORITY have no benefits after they serve. They have no savings program. They have nothing towards retirement. And we want to avoid creating a retirement program that INCLUDES those people.... so we don't piss off the 20+ folks, some of whom ran for the hills at 20 years and became a contining liability for the military? Huh?

"I did my 20.... I earned this." No, you did your 20 and you got paid twice a month for those 20 years. There isn't a magic switch at the 20 year mark.... BOOM your earned a lifetime of retirement at 37 years old...... oh you only have 19 years under your belt.... you have earned nothing.

And where is the "401(k)s don't work" talk coming from? Contributions is a MAJOR aspect in hiring in the private sector. You don't think my 7% matching is far more attractive to me than my previous employers 3% matching? And when I leave, I'm not a life-long liability for my organization... I take the money I've saved, half of which came from my employer, and I go to another job.... I'm no longer on their balance sheet.... I'm no longer a liability.
 
It may be important to mention that many enlisted members (at least this was my experience in the Coast Guard) have four-year degrees. True, some have 2.... but some also have master's.
 
I actually tend to agree with LITS on this one. I am not a financial genius by any means, but why not have some options for military members. Everyone comes in with an initial contract. Most people get out at the end of this, so why not have an initial 401k type matching plan that way for those who depart they have something to take with them. For those who sign the next contract or stay in, why not provide a 3 day workshop on options for military members for various retirement options. A buddy of mine works for a large corporation and they do this exact method for their employees at the 5, 10, 15, 20 mark. This way military members can pick a plan that works best for their families, career field, education, goals, etc. Maybe a Marine made E-4 in his first contract, but knows his chances of doing 20 are slim, but wants to do one more 3 year tour. Why not after some counseling and understanding of his options allow him to pick the best plan for himself, instead of walking away with 0 at the end of 7-8 years?

Oh and since most of my friends are right near the 20 year mark, the amount that said, I am outta here at 12-15 year mark was so much higher than I ever thought. The ones who left were the best officers I knew. The military lost out on amazing leaders. I cannot tell you the number of officers who stayed because, "What else am I going to do?" or "Where can I get paid this much to do so little?" Yes I have heard that so many times it is scary. But, that is for another debate.

Like I said, I am no genius. I pay a guy I trust to manage my money. LITS, 7% is amazing. I have had up 5%, but never beyond that.
 
NavyHoops said:
I actually tend to agree with LITS on this one. I am not a financial genius by any means, but why not have some options for military members. Everyone comes in with an initial contract. Most people get out at the end of this, so why not have an initial 401k type matching plan that way for those who depart they have something to take with them. For those who sign the next contract or stay in, why not provide a 3 day workshop on options for military members for various retirement options. A buddy of mine works for a large corporation and they do this exact method for their employees at the 5, 10, 15, 20 mark. This way military members can pick a plan that works best for their families, career field, education, goals, etc. Maybe a Marine made E-4 in his first contract, but knows his chances of doing 20 are slim, but wants to do one more 3 year tour. Why not after some counseling and understanding of his options allow him to pick the best plan for himself, instead of walking away with 0 at the end of 7-8 years?

Oh and since most of my friends are right near the 20 year mark, the amount that said, I am outta here at 12-15 year mark was so much higher than I ever thought. The ones who left were the best officers I knew. The military lost out on amazing leaders. I cannot tell you the number of officers who stayed because, "What else am I going to do?" or "Where can I get paid this much to do so little?" Yes I have heard that so many times it is scary. But, that is for another debate.

Like I said, I am no genius. I pay a guy I trust to manage my money. LITS, 7% is amazing. I have had up 5%, but never beyond that.
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The other option I've seen is a graduated contribution system. Match 3-5% to 10 years.... 7-9% after 20 years. That matching continues until the member separates. I have a good salary, especially, in my opinion, for a 31 year old. I think 7% of my salary sets me up nicely, but the reality that the savings is really 14% of my salary... that's big.



While I was in the Coast Guard I was aware for a few facts...

1. While I was at sea.... I saved money.
2. I could expect a regular raise or promotion... at 1.5 years I'd make O-2, at 4 years O-3, etc.
3. BAH was HUGE! Well, the BAH part I didn't realize until I got out, took a job with a higher salary, but saw less in my paycheck. "WHERE'S MY MONEY!?!?!" ...."Taxes."

When I separated I had put some money away in an Roth IRA.

And then I went to the private sector. I contributed to my 401 (k) to the max matching amount (because anything less and you're "throwing away free money").

YES.... my 401(k) does ride the market.... as does my Roth IRA and my traditional IRA.... so there is a chance I could take a huge hit in a down-turn.

Now the only thing I don't know is.... would a matching contribution system for the military be more expensive than the current retirement system? I like to think it isn't. I think the current system is more expensive... but I have NOTHING to back up that assumption. I'm sure if I've been thinking about this.... it's likely been through about elsewhere too... by people who do have the numbers.
 
LineInTheSand said:
The other option I've seen is a graduated contribution system. Match 3-5% to 10 years.... 7-9% after 20 years. That matching continues until the member separates. I have a good salary, especially, in my opinion, for a 31 year old. I think 7% of my salary sets me up nicely, but the reality that the savings is really 14% of my salary... that's big.



While I was in the Coast Guard I was aware for a few facts...

1. While I was at sea.... I saved money.
2. I could expect a regular raise or promotion... at 1.5 years I'd make O-2, at 4 years O-3, etc.
3. BAH was HUGE! Well, the BAH part I didn't realize until I got out, took a job with a higher salary, but saw less in my paycheck. "WHERE'S MY MONEY!?!?!" ...."Taxes."

When I separated I had put some money away in an Roth IRA.

And then I went to the private sector. I contributed to my 401 (k) to the max matching amount (because anything less and you're "throwing away free money").

YES.... my 401(k) does ride the market.... as does my Roth IRA and my traditional IRA.... so there is a chance I could take a huge hit in a down-turn.

Now the only thing I don't know is.... would a matching contribution system for the military be more expensive than the current retirement system? I like to think it isn't. I think the current system is more expensive... but I have NOTHING to back up that assumption. I'm sure if I've been thinking about this.... it's likely been through about elsewhere too... by people who do have the numbers.
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Early in my career I worked for a firm that had a defined contribution plan that was fully employer funded but graduated. The formula was (age + years in company)/6. Unfortunately, they decided that we were not smart enough to invest it ourselves, so they decided to pay a fixed rate based upon the 10-year T-bill + .5% with a floor of 5%. Example a 29-year-old with 7 years would get 6% (29+7)/6. And at the end (age 55 or older) you could get it annuitized (don't want you rolling it into your own better managed money).

Now for many financially illiterate folks, this formula might be better than what they might otherwise do with the money (stupid pet-stock investments or sitting in a money-market). And one might argue our enlisted soldiers are not being trained as financial analysts, so a guaranteed fixed return might be appropriate, but I suspect there are better investment options than what my previous employer was doing.

And BTW, I only had that defined contribution plan the last 3 years (of 14.5) I worked there. The first 11.5 was in a defined benefit plan that was terminated with the present value of what had been vested to be paid at age 65 if you quit that day being credited to the defined contribution account as payment in full. The amount I received for 11.5 years of service ended up being about 10% of the salary I was currently earning at that time because the formula was very back-end loaded. So for 14.5 years of service, the current estimated pension from that time will be ~$500/mo when I reach 67. Most of that from the 3 years in the defined contribution period...

There is verb form of a noun describing an elongated, self-threading, spiral fastener that describes how that was perceived.

Bottom line here is that you've got to take care of those who are taking care of the country. If the troops sense that fastener coming, we are in for a world of hurt...
 
Wonder how a 401K system will affect the AFs ability to retain pilots or entice them into the reserves?
 
aglages said:
Wonder how a 401K system will affect the AFs ability to retain pilots or entice them into the reserves?
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I would guess services would have to re-evaluate how they treat their people. The AF wouldn't be able to push people around, with the understand that a 20 year incentive was there. Of course, it also seems the Air Force spends a good chunk of money now in "bonuses" to keep them around, so I'm not sure how much that 20 year mark is influencing their decisions.

Do we want to cripple the services and their parent departments with unsustainable liabilities, just to create career officers (and do we really want career officers anyway?)
 
MDDADD said:
Question from a parent of an Academy candidate:

Am I understanding you folks correctly to say there is no government version of a 401K available to service members now? That up to 19 years and 364 days (ie short of 20 years) there is absolutely zero in terms of retirement pension/benefit/saving from the government?

So its all on you till 20 years?
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Correct.
 
MDDADD said:
Question from a parent of an Academy candidate:

Am I understanding you folks correctly to say there is no government version of a 401K available to service members now? That up to 19 years and 364 days (ie short of 20 years) there is absolutely zero in terms of retirement pension/benefit/saving from the government?

So its all on you till 20 years?
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There are pre tax savings options and plans, they have the TSP. The difference is that with these plans the military does not match any of the contributions. Service members can still save for retirement and get tax benefits from those savings, they are just not matched.
 
I've been following this thread and the one thing I'm getting from it is that the discussions are eluding to that all jobs outside the military have retirement or investment plans and options. Which we all know is not the case. Therefore why should the military need to provide something that a lot of the private sector does not?

I would venture a guess that those people that are in the military and invest in retirement plans on their own would be the ones that would invest in the private sector also.

The other thing is, it is just a job, all be it a very crucial job, to be in the military. Yes our freedoms are dependent on them, but our lives are dependent upon all the other normal jobs too. I bet more people quit the military because they do not like their jobs, location, or bosses than for any other reason. Just like they do in the private sector.

I personally see nothing wrong with the 20yr mark. I think if you had a graduated plan, say 25% retirement at 10yrs and 50% at 15 yrs you would see more people shooting for those marks and spend more money than what is spent on the current 20yr plan.

just to create career officers (and do we really want career officers anyway?)

You gotta have some career officers unless you start people out at Col. and Generals.
 
Having some sort of retirement benefit for the majority of the force that does not/will not serve 20 years would be a good thing for the majority.

I'm wondering about the career officers and NCOs though...
Since the military does not allow people to simply enter the rank structure at mid to upper levels (docs and lawyers excepted), how important is that "stay with it" kind of benefit to maintaining a large enough pool for senior leadership selection at the SNCO and FGO/GO levels?
You can hire an O-6 to be a CEO, but you can't hire a CEO to be an O-6.
 
raimius said:
Having some sort of retirement benefit for the majority of the force that does not/will not serve 20 years would be a good thing for the majority.

I'm wondering about the career officers and NCOs though...
Since the military does not allow people to simply enter the rank structure at mid to upper levels (docs and lawyers excepted), how important is that "stay with it" kind of benefit to maintaining a large enough pool for senior leadership selection at the SNCO and FGO/GO levels?
You can hire an O-6 to be a CEO, but you can't hire a CEO to be an O-6.
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And yet.... O-4's (which in some services are still considered junior officers) can receive retirement for life.... mid-level leadership.... possibly 40 years old..... "retiring".... hmmmmmm.

Money doesn't grow on trees. That's an individual who will receive benefits and retirement pay for the next 30-60 years..... how is that sustainable.
 
I'd like to know how many 40 yr old retirees there are. Without that figure you can't determine if the current system is sustainable.
 
True, but remember this is 50% of the person's current salary NOT including housing and "subsistence" allowances which (depending on where you live) can be substantial and which are not taxed. Thus, if the military member doesn't secure a second job, it is a big downward change in his/her status of living.

It also means you are "staring over" at around age 42 (or later). It may be easy to get a job right away, when your rolodex is current, but the sad truth is that, a few years later when your rolodex is outdated, you are expendable.

When the country is not at war, the military careerist travels all over the world and his/her spouse is unlikely to be able to sustain a career (and in many cases isn't even able to work). Many of those retiring now have spend much of their career deployed in a war zone. I think the retirement pay is more than fair.

Finally, remember, it's a volunteer military. If someone thinks the retirement benefits are so terrific, they are free to sign up. :smile:
 
usna1985 said:
When the country is not at war, the military careerist travels all over the world and his/her spouse is unlikely to be able to sustain a career (and in many cases isn't even able to work).
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During one period as a military brat we moved 13 times in one 6-year stretch; I even attended three different kindergartens. Your point about military spouses suffering a significant impact to their ability to have a lucrative career is spot on.

Hell, forget lucrative.... try even having a teaching degree (mom) you need to recoup the investment on and looking for a job when you have to re-certify in state after state {for a fee of course} and then have to continually leave partway through the school year anyway. Not easy to get hired as you might guess. And even if you do, of course you will forfeit one of the key benefits that offsets low teaching pay in the early years; the pension at the end of the rainbow after years of tenure.

But that's ok, at least your military spouse will have a pension since you had to give yours up as a teacher.... oh wait, maybe not.

*************

PS: For those that think this military retirement pay issue is simple, perhaps you can share a list of magical career opportunities that exist for military spouses that will offer them 7% (or even 5%?) 401k matching funds that they will be 100% vested in before they have to PCS out in a year or two. Bueller?
 
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My mother was a military wife and teacher in the 1950s - 1970s. Many school districts refused to hire her -- told her, "We're know you'll be leaving within [six months, two years, etc.] and maybe even mid-year meaning we have to find a replacement for you, so why bother?" Even when she did get a job, she couldn't "rise" to a higher level (e.g., ass't principal, principal) for the same reasons.

In many countries outside the US, the status of forces agreement prohibits non-military US personnel from working off base. And, for certain professionals (e.g., doctors, lawyers or even estheticians) who need to be licensed by a particular state, even moving within the US makes finding/holding a job in those fields nearly impossible.

It may be SOMEWHAT better today in that there are more situations where the couple is both military. And spouses are somewhat more likely to find gainful employment and some even eke out some sort of career. However, of those senior officers (O-6 and above) I know -- both male and female -- not one has a spouse who works outside the home. And, as an aside, the desire of a spouse to have a meaningful career is now a major reason that a service member leaves the service "early" (long before retirement).

The bottom line is that, as noted above, the military member is likely either the primary or, often, sole wage earner during their time in the military and even thereafter. So, whereas many couples at least have the option of two main wage earners and two retirement incomes, military members are likely supporting a family during their career and then retirement for a couple on a single salary/pension.
 
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LineInTheSand said:
And yet.... O-4's (which in some services are still considered junior officers) can receive retirement for life.... mid-level leadership.... possibly 40 years old..... "retiring".... hmmmmmm.

Money doesn't grow on trees. That's an individual who will receive benefits and retirement pay for the next 30-60 years..... how is that sustainable.
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Yep, some O-4s do 20 and retire. The ones I've seen were often forced out, as they liked the job they had, and didn't want to leave the flying world to be more administrative/organizational leadership. I usually found those people to be very experienced pilots, and good instructors for new flyers. The military writ large obviously doesn't value the "20 year major" the same way.
 
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