Does the Gov. match for military members?

Military Discussion.

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crondanet5
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Re: Does the Gov. match for military members?

Post by crondanet5 »

Correct.

tomleeinar
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Re: Does the Gov. match for military members?

Post by tomleeinar »

Overall I don't like the new plan either, but do remember that under the current military retirement plan, if you don't stay in for 20 years, you get nothing at all (let's keep all the irregular retirements out of it). So even something small like the eventual 5% match is better than a big nothing for 17 years of service. Also, I do like that the money in a TSP is yours. If you die, you get to leave it with your family, charity, or whatever. It can continue to grow long after you are gone. With the military retirement you might be able to SBP it for a little while, but it eventually quits paying. Not advocating for the new plan, but it's not ALL bad.

crondanet5
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Re: Does the Gov. match for military members?

Post by crondanet5 »

I have SBP. And at the time I took it out my computer revealed my wife would get every penny I put into the program back in less than a year. And she would get a monthly benefit each month for the rest of her life. Talk with your Finance people about the SBP program and how it will work for you.

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Navig8tor
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Re: Does the Gov. match for military members?

Post by Navig8tor »

tomleeinar wrote:Overall I don't like the new plan either, but do remember that under the current military retirement plan, if you don't stay in for 20 years, you get nothing at all (let's keep all the irregular retirements out of it).


I get what you're saying; however, why do we need to change our entire retirement system from an All-or-Nothing system to a "corporate style" system so that we can entice the "give it to me now generation" to sign the line. I don't think we do. In normal fashion in a post-war environment, all branches are putting people on the street, and I haven't seen anyone saying they are having issues hitting recruitment goals. I don't think a 401K-type account is a "recruiting incentive."

Fact #1: Nearly 80% of high school seniors are ineligible for military service. That leaves a pool of 20-some percent of potential high school graduates. Of that 20% pool of eligible folks, I think I read less than 1% of of high school graduates actually join the military.

Fact #2: Less than 17% of new joins stay long enough to attain military retirement (20 years). Less than 1% of that 17% remain in long enough to hit the 30-year mark and a 75% retirement annuity.

Fact #3: The military "retirement plan" is clearly laid out and explained in any number of places. Folks know, or should know, what their retirement options are when they join. The "option" of a decent military retirement at an early age has always been one of the main perks of serving 20 years. When a "potential" is talking to recruiters, they are told, "20 years and you get "X" percentage forever...and by the way, it's up to you to get up the rank ladder...we're not going to do it for you." Since I joined in 1986, that retirement percentage has continued to shrink about every 10 years.

So - Just looking at the baseline numbers, why do we need to change the entire military retirement system, for what amounts to less than than 1% of the potential military pool?

Sure, you can say it's really only effecting the 17% of folks who stay in long enough to retire: however, I argue that you'll see fewer people staying in that long because of the severely deteriorated retirement benefits, and, in a matter of years you're going to see SERIOUS leadership and readiness issues throughout all five branches because so few people are staying in long enough to reach retirement. I see a serious future problem of "juniority" (folks who aren't ready for leadership and management positions who are promoted to fill billets). IF only we were all Navy Seals...we may escape the "leadership" issues.

Not to mention, what are MOST PEOPLE doing in their 20-30's: having kids, raising a family, buying homes etc. How many military folks in the lower and mid-rank pay grades who will be doing exactly that are going to be able to set aside enough money to see a 5% match? The Pentagon knows that!

Moving to a corporate-style 401K deal may seem like a good idea in a big-picture scheme; however; when you sit there and really pick it apart, it's nothing more than cost-cutting measure being passed off as a "perk" for the younger generations who don't know any better.

The Pentagon no doubt knows that most young people don't save money; they never have and probably never will. Saving money, planning past the end of one's nose, and setting up one's future remains a foreign concept until your madula oblongata evolves in your mid-twenties.

I had one new-join tell me, when I asked what his savings plan entailed, "Sir, I may not live to be 65 years old, and I don't make anything now. This is as much money as I've ever had in my life and I'm going to live a little." Dude came into work not two weeks later driving a brand new Volvo.

The Pentagon knows that the overwhelming majority of new-joins don't remain on active duty very long; never have and never will. As such, they are working the numbers to ensure they cut costs and come out ahead. Yeah, some folks may do four years and leave with a little coin in their account. Some may stay in long enough to reap the mid-career bonus. Very few will remain in long enough to build a decent account, receive the mid-career bonus AND reach retirement eligibility (albeit with a much smaller annuity). I'd be curious to see how many short-term enlistees leave the service and cash out their TSP (incurring all kinds of tax penalties), or how many stayed in long enough to get the mid-career bonus and then promptly blew it on a new car, a vacation etc.

In my opinion, the new retirement plan benefits the Pentagon by cutting personnel costs; it penalizes wanna-be retiree's, and caters to the youngest generations who have the "gotta have it right now" mentality. I may be "old school" in my thought processes as the result of already having 30 years of active duty behind me; however, I think the new retirement system it's nothing more than dirty-pool conducted by bean counters to save money.

Kinda like the Pentagon continuing to recommend, and sign off on, poor military pay raises year in and year out for the past 8 years. Kinda like the continued deterioration of retiree healthcare benefits. Kinda like the recent stoppage of transfer eligibility of Post 9/11 GI Bill benefits to dependents. Kinda like the current reduction of military tuition assistance....

If this crap keeps up, it won't be long until the there won't be any reason to join the military other than one's own patriotism and obligation to serve. I mean, that's why I joined :D I'm sure that was Cro's motive as well. :lol: :lol:
Last edited by Navig8tor on Fri Mar 18, 2016 3:28 pm, edited 1 time in total.
Navig8tor
CWO4 (BOSN)
USCG, RET

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Navig8tor
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Re: Does the Gov. match for military members?

Post by Navig8tor »

crondanet5 wrote:I have SBP. And at the time I took it out my computer revealed my wife would get every penny I put into the program back in less than a year. And she would get a monthly benefit each month for the rest of her life. Talk with your Finance people about the SBP program and how it will work for you.


Unless you went with a much lower benefit percentage than 55%, I still have not been able to figure out your numbers on that one.

I'd have to pay over $350/month for 30 years for my wife to see 55% of my final base pay. If I died two years after I retired, of course, she'd benefit greatly. However, if I live 30 years after I retire, which would make me 80 years old; I may as well have burned $126,000 of my retirement pay in the back yard. That's how much I'd pay into SBP over 30 years (based on the retirement pay of a 30-yr CWO4). By that age, we're both totally retired, living off our investments, military retirement, and Social Security (provided there is any) while we knit socks, watch Jeopardy and argue about who's turn it is to dispense the daily medications.

BTW, after our last convo on SBP, I did verify that the premium has to be paid until death or for 30 years after retirement, whichever comes first. SBP is an option, but I don't think it's a good one for me. The longer you live, the more it costs. Life insurance isn't much better; however, at least it pays off lump sum.

Had I been smart, I'd have bought a home in Florida, early on in my career, and had a renter paying the mortgage until I retired from active duty. By the time I was 80 years old, I'd have no reason to be paying for life insurance. The only real reason I have now is so the mortgage doesn't eat into my estate. But, my madula oblongata wasn't yet developed and I didn't think that far past the end of my nose :roll:
Navig8tor
CWO4 (BOSN)
USCG, RET

crondanet5
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Re: Does the Gov. match for military members?

Post by crondanet5 »

And you were not sure if you wanted to retire to Texas or Florida. Sounds like the fishing holes have decided where you will retire.

Because of your financial situation there may be a better way to provide a "pension" for your widow that would cost less than SBP.

Relevant do you have any ideas on this?

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Navig8tor
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Re: Does the Gov. match for military members?

Post by Navig8tor »

crondanet5 wrote:And you were not sure if you wanted to retire to Texas or Florida. Sounds like the fishing holes have decided where you will retire.

Because of your financial situation there may be a better way to provide a "pension" for your widow that would cost less than SBP.

Relevant do you have any ideas on this?


I'm going wherever the money takes me, I'll find the fishing holes after I get there.

Matter of fact, I'm applying for a federal civilian job as soon as I finish tweaking my resume to fit the job. While it's not exactly where I wanted to go locale-wise, it'll hold me over "for now." Gotta get your foot in the door, right!
Navig8tor
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USCG, RET

tomleeinar
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Re: Does the Gov. match for military members?

Post by tomleeinar »

Cron, I think I did a bad job of explaining but the TSP can be a generational retirement. Upon my death, the TSP balance rolls into a trust account making payments that I hope will last for my kids and their kids. Military retirement ends when you and your wife do.

Nav, I agree that the new retirement is a way to cut personnel costs for DOD. Overall, it is bad for the people who stay 20 years, but good for those who do not. We'll have to see how the future SMs decide to serve. I just expect the 20 year serving SMs to go down no matter the retirement plan. Either way, I'll be in a bunker in an unnamed nation hoping never to be found!!

PygmyJess
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Re: Does the Gov. match for military members?

Post by PygmyJess »

For current service members they will see an immediate government match up to 5%. The 1% for two years is for members joining after December 31, 2017. I did a rough calculator that basically compares both with your total compensation per year that includes base pay, retirement pay, and your TSP. It's definitely all dependent on the individual and how they have invested over the years and whether or not an approximate loss of $6,000 of "seen" money a year after serving 20 is worth the amount you have in your retirement plan.

Chulke
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Re: Does the Gov. match for military members?

Post by Chulke »

It's all smoke and mirrors and fuzzy math that is designed to make you THINK you are getting a good deal. Let me tell you first hand, as a retiree with 20 years of service in the military, it will not benefit you in the long run. It is ALWAYS in the best interest of Uncle Sam whenever they offer some new GREAT thing that has to do with money. Period. End of story!

The POTENTIAL exists for it to be good, but the guarantee is not there! Your best benefit as retiree is the healthcare, IMO. it's worth more than the retirement. And with things going the way they are with healthcare in the US. It's looking more and more like the best thing going, at least for now.

Good luck to you! And always be wary of the shiny new benefits Uncle Sam is offering you! Make sure you read the fine print!



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raahide
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Re: Does the Gov. match for military members?

Post by raahide »

1 Jan 2017 - 31 Dec 2017
Blended Retirement System education period
Go the the JKO site and take the 2 hour CBT (which everyone under 12yrs of service hws to do, at least in the Air Force, regardless of choosing the legacy retirement system).

1 Jan 2018
Fist day eligible to opt in to the BRS retirement. Not sure if it also goes active on this day (have not finished CBT)

31 Dec 2018
Last day eligible to opt in to the BRS retirement.

1 Jan 2019
Congratulations if you did not opt in you will remain in the legacy retirement system
Congratulations if you joined the service today you are automatically enrolled in to BRS


I am choosing legacy having 7 yrs of service in July.
There is a retirement calculator on the JKO site (hopefully fixed now).

What I did was add up my tsp contribution for the remaining years of service i have left to hit 20 (12 yrs) as if i would never have gotten promoted again then added 12 additional years of retirement at my never got promoted again base pay but at 50% (legacy retirement system pension). Add that and it should give you an idea.
Do same for BRS
12 yrs of tsp contribution as if i never got promotoed again but add 5% for matching (because everyone will contribute 5% minimum because we love free money) plus an additional base pay @2.5 - 13 at your 12yr mark (dont remeber what affects the multiplier) plus an additional 12yrs of pension at 40%.

Note: did not factor in growth or time in service since its same no matter what system you choose.

Additionally, stop focusing on the you get nothing from legacy if you dont do 20. if you dont do 20 you get no pension regardless of which you choose cause you get no pension from the brs if you dont do 20 either.

you get the match as long as you contribute. if you are not in service you cannot contribute. rolling in money does not count (not 100% on this) because the only money that counts is money from who pays you, dfas.

i am staying legacy because i believe the 50% pension will out grow the 5% match and 12yr bonus the longer you live.
if you do select BRS make sure you choose it on 1 Jan 2018 to benefit crom the match ASAP.
Also if you select roth make sure you at least drop 5% in traditional to not leave free money (not 100% yet if roth benefits from match)
keep in mind i have not finished the cbt/research yet.

raahide
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Joined: Fri Apr 14, 2017 3:50 pm

Re: Does the Gov. match for military members?

Post by raahide »

Last statement is if you s lect BRS and dont do 20 you walk away with your retirement (if you started) with and additional 5% versus legacy with just what you put in.

Dela444
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Re: Does the Gov. match for military members?

Post by Dela444 »

If your a lifer, the new plan equals less money when saving 5%. If you're going to do 4 - 8 years, the new plan is great because you can build up a decent 401k to roll over to a real 401k plan that has more funds then just g,f,i,c,s.

baroclinic
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Re: Does the Gov. match for military members?

Post by baroclinic »

New plan also drops a nice continuation pay on you in the 12 year mark unless they change it, which you can also drop in your TSP.
And you still get your annuity, just not as much with the old system 2% new/2.5% old.

Still, the old system might be more money if you end up with a long life span. I'll take the safety cushion of the new plan myself. Also helps that my father and grandfather passed early, so Murphy's law would ensure a super long life span by making this mistake :)

Timber82
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Re: Does the Gov. match for military members?

Post by Timber82 »

So question... a reservist who is also serving as a Civil servant. Will both matches be done or would any TSP money put in with the reserve pay be unmatched?

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Fund Prices2022-08-10

FundPriceDayYTD
G $16.99 0.01% 1.49%
F $19.12 0.15% -8.47%
C $64.14 2.13% -10.85%
S $69.64 3.34% -16.54%
I $33.95 2.14% -13.91%
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Linc $22.96 0.56% -2.25%

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