Discussion in 'Life After the Academy' started by glithfire, Aug 17, 2015.
I agree with the above statements
This doesn't directly answer the original question, but for graduates of the four military academies (i.e, not from other commissioning sources), the retention rate past five years for USMA, USNA and USAFA is about 30%. For the USCGA it is about 85%. This is believed to be because difference in missions. (USCGA Admissions beats that number into us Partners. And, in the interest of full disclosure, I haven't seen it updated in a couple years)
A somewhat related question: Given the above posts, would you recommend the traditional or blended retirement currently being offered this year?
I’d say for those who have the option and plan on doing the full 20 years, stay with the traditional to get the 50% pension. If you plan to get out before 20, I’d take the new system for the 5% government match in the TSP.
It depends on if you plan to do 20, how long you have in, and how well disciplined your investing is.
If you are not going to do 20, definitely do the BRS. Not doing BRS and leaving before 20 is throwing away free money.
If you are not going to be disciplined enough to at least max out the matching under BRS, stay with the old. (But really, it is quite easy, especially on officer pay rates).
The BRS relies on the market to make up for the 20% reduction in pension. If you start from day 1, do max matching (5%+5% match), and get average historical S&P500 returns (~7%), you can potentially do better than the legacy system. If you are at the 5-7yr point right now, it's pretty much a wash (assuming 7% returns on the TSP). If you have been in for more than 7ish years, you would have to do above average in investing to beat the legacy system. (Also assumes normal career progression and retiring as an O-5.)
I would highly recommend investing far more than 5% of your pay. 50% of your base pay is somewhere around a third of your actual pay, due to BAH, BAS, flight pay, etc. Most people will not want to retire on a third of their previous income.
The short answer: It depends. For the overwhelming majority of people, the BRS is a better deal. Something like 87% of servicemembers do not make it to 20 years. Some money > no money.
I think people get wrapped around the axle that:
a: A 50% pension is better than a 40% pension, which is true
b: The Government is doing this, therefore it is ultimately to save money, and therefore a scam that will exploit servicemembers, which is half true (the purpose is to save the government money, but at the end of the day this is, actually, a pretty good deal for most people).
The longer answer: Pretty much everyone in my situation or with under ~8-10 years TIS should probably opt in, with exceptions. Almost everyone on their first enlistment/billet should opt in. Serving to 20 is never a guarantee, especially on the officer side. The military may be hurting for retention now (ex. the Air Force allowing literally anyone to promote to Major), but that can change very quickly. People's personal situations change as well. Single 2ndLt with his hair on fire wanting to fly fighters may be all about staying in for 30 years, eight years down the road that now-Capt with a wife, kids, a couple deployments under his belt ,and the airlines calling may be looking to bounce at his first chance.
I already opted in. I have ~5.5 yrs TIS, am obligated through to 11 years TIS, and am unsure about whether not I am staying in, though leaning towards no. For me it's a no brainer. Even if I decide to stay to 20, I'll have matching on my TSP (to which I contribute much more than the required 5% to get the full match) for 15 years plus my pension. I'll do okay.
I highly recommend that every time your pay increases, set up an automatic investment for half of the increase.
I ended up getting passed over for O3 on my first board, so opting in was a no-brainer. Even if I make O3 on the next board, I'm comfortable with my decision as it provides me the flexibility to leave with some benefit
Separate names with a comma.