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Blended Retirement System-US Military
09-15-2016, 02:37 PM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,674
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Blended Retirement System-US Military
I missed this January 2016 piece of info about future military retirees. None of this will affect me, but it will affect those in the future.
Still looks like a good retirement program, just not as "guaranteed" as mine.
Quote:
"An overhaul of the current military retirement system is slated to take effect January 1, 2018. The new system has three elements: a 401(k)-style component with Defense Department matching funds for entry-level and other service members, a mid-career continuity bonus, and a retirement annuity similar to the one now in place for service members that complete twenty or more years of eligible service."
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DoD Plans Benefit Revision With ‘Blended Retirement’ > U.S. DEPARTMENT OF DEFENSE > Article
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09-16-2016, 06:38 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Jan 2005
Location: DFW
Posts: 2,016
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You're right, it isn't guaranteed. I'm betting the long range goal is most troops will not stay in for 20 years. I didn't see anything about medical care.
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Disclaimer: My Posts are for my amusement only.
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09-16-2016, 03:10 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
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Quote:
Originally Posted by Eagle43
You're right, it isn't guaranteed. I'm betting the long range goal is most troops will not stay in for 20 years. I didn't see anything about medical care.
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As it stands, very few stay past 20 anyway. The last numbers I looked at for the AF had about 18% of officers staying to 20 and 13% of enlisted and the number for the Army and USMC are considerably lower (by design...you don't want a bunch of 45 year old troops fighting wars). So I think he blended retirement is a pretty good deal for the large majority who DON'T get vested since they don't do 20.
If you are CRAZY bored, here is some reading from the DoD Office of the Actuary on the Mil Retirement system (Sept 2015):
http://actuary.defense.gov/Portals/1...-26-162207-987
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FIRE'd in 2014 @ 40 Years Old
Professional Retiree
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09-16-2016, 07:43 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Location: Bonita (San Diego)
Posts: 1,795
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I think it's a good idea and a fiscally responsible move. Let's face it - the 20 year DB pension and health care for life creates a number of folks who are just sticking out their time for the wrong reasons (not that aiding one's personal financial security is a bad reason, but it's not the right reason we ideally want folks to serve).
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"So we beat to our own drummer in the sun;
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09-17-2016, 06:00 AM
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#6
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gone traveling
Join Date: Nov 2014
Posts: 435
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Quote:
Originally Posted by nash031
I think it's a good idea and a fiscally responsible move. Let's face it - the 20 year DB pension and health care for life creates a number of folks who are just sticking out their time for the wrong reasons (not that aiding one's personal financial security is a bad reason, but it's not the right reason we ideally want folks to serve).
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and what reason might that be? i did my 20, but probably none of my reasons match yours.
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09-17-2016, 08:41 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
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Quote:
Originally Posted by kitesurfer2
and what reason might that be? i did my 20, but probably none of my reasons match yours.
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I'll answer the question; after about 18 years, I stopped caring. Not just a little..A LOT. So, was that a detriment to my co-w*rkers? Probably. I didn't care though...I was in it for me. I could have cared less about the mission anymore. I spent enough damn time answering the call from Big Blue and the last few years I was in it for ME and NOTHING MORE. And guess what? I guarantee that I was NOT the only one.
Had there been a blended retirement available, I would have probably punched at 15 years and made some room for those below me and WANTED to serve for the right reasons.
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FIRE'd in 2014 @ 40 Years Old
Professional Retiree
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09-17-2016, 09:59 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Feb 2008
Location: Indialantic FL
Posts: 1,330
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Quote:
Originally Posted by nash031
I think it's a good idea and a fiscally responsible move. Let's face it - the 20 year DB pension and health care for life creates a number of folks who are just sticking out their time for the wrong reasons (not that aiding one's personal financial security is a bad reason, but it's not the right reason we ideally want folks to serve).
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I really don't think this will save much money. I believe they will have to use more financial incentives to have NCOs and junior officers stay to the 10-15 year mark. TSP matching for nearly 100% of the force vs DB pension for 10-20% of the force... This won't solve the issue of those that stick around for their own financial security.
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JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
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09-17-2016, 10:12 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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Quote:
Originally Posted by jimnjana
I really don't think this will save much money. I believe they will have to use more financial incentives to have NCOs and junior officers stay to the 10-15 year mark. TSP matching for nearly 100% of the force vs DB pension for 10-20% of the force... This won't solve the issue of those that stick around for their own financial security.
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Perhaps the rank structure will change/get flatter. Responsibilities will be pushed down to more junior ranks, staffs (especially) will have a rank structure with a wider (and less "years-in-service") base. IMO, in some cases that would be good, in many places it would not. Promotion rates could be lower and the "up-or-out" eliminated with short-term, as needed incentives. A big concern, regardless of the ranks, is that detailers now have pool of "very unlikely to be promoted but can't afford to leave" folks that they put against some really crummy assignments. When folks >can< afford to leave, those assignments become a lot harder to fill.
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Blended Retirement System-US Military
09-17-2016, 12:39 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Location: Bonita (San Diego)
Posts: 1,795
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Blended Retirement System-US Military
Quote:
Originally Posted by ExFlyBoy5
I'll answer the question; after about 18 years, I stopped caring. Not just a little..A LOT. So, was that a detriment to my co-w*rkers? Probably. I didn't care though...I was in it for me. I could have cared less about the mission anymore. I spent enough damn time answering the call from Big Blue and the last few years I was in it for ME and NOTHING MORE. And guess what? I guarantee that I was NOT the only one.
Had there been a blended retirement available, I would have probably punched at 15 years and made some room for those below me and WANTED to serve for the right reasons.
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Pretty much exactly this.
For kite surfer- you'll note that I said "a number of people", not "all" or "most", etc. It is undeniable that the DB at 20 creates ROAD people. Maybe you weren't one - kudos. But they're out there and the quantity is significant.
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
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09-17-2016, 12:42 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Location: Bonita (San Diego)
Posts: 1,795
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Quote:
Originally Posted by jimnjana
I really don't think this will save much money. I believe they will have to use more financial incentives to have NCOs and junior officers stay to the 10-15 year mark. TSP matching for nearly 100% of the force vs DB pension for 10-20% of the force... This won't solve the issue of those that stick around for their own financial security.
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It's hard to see where it won't save money. Every private firm that has switched from major DB to DC has saved money over the long term. In the near term, it will not because you'll still have a lot of pensioners on the books, but over the long term, you'll be able to match contributions for four service members for every O5 pension you reduce, and higher for higher E and O ranks. It is undoubtedly a money saver, and a necessary one because the problem isn't getting better as time goes on, life expectancy increases, and health care costs go up.
Up next: copays for TFL.
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
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09-17-2016, 01:18 PM
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#12
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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Oh, the new retirement system will save money. For DoD.
DoD currently funds military pensions with special-purpose Treasuries that pay a ridiculously low (but guaranteed) rate of return. When DoD shifts that burden to the servicemembers, DoD's expenses will plummet.
The good news is mandatory TSP enrollment with mandatory 1% contributions to the L2050 fund. It's a start. Fewer than half of today's servicemembers even have TSP accounts, and way too many of them are invested in the G fund. Meanwhile the FERS civil-service employees are seeing a 90% contribution rate via their mandatory enrollment.
It's not all rainbows and unicorns, however:
Beware of Huge Flaws with the Military Blended Retirement System
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09-17-2016, 01:25 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Feb 2008
Location: Indialantic FL
Posts: 1,330
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Quote:
Originally Posted by nash031
It's hard to see where it won't save money. Every private firm that has switched from major DB to DC has saved money over the long term. In the near term, it will not because you'll still have a lot of pensioners on the books, but over the long term, you'll be able to match contributions for four service members for every O5 pension you reduce, and higher for higher E and O ranks. It is undoubtedly a money saver, and a necessary one because the problem isn't getting better as time goes on, life expectancy increases, and health care costs go up.
Up next: copays for TFL.
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Most private firms main business is not the conduct of war. Higher turnover in the military increases costs of training, PCS, and retention(bonus/special pay). If looking at only retirement pay, then someday down the road it might save retirement pay funds but not so sure about overall defense spending. I'm in favor of increasing what retirees pay for tricare but I think that is a different issue.
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JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
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09-17-2016, 01:35 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,674
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Quote:
I'm in favor of increasing what retirees pay for Tricare
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Why?
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Part-Owner of Texas
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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09-17-2016, 02:15 PM
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#15
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Recycles dryer sheets
Join Date: Nov 2005
Posts: 165
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I will hit 15 years with Big Blue in a few months. Obviously I have had many conversation regarding this very subject with people who are currently serving. The main point that is always highlighted is retention. Why would anyone stay in for longer than 10 years if they can obtain the same 401k matching, or better on the outside? I think most people will swap to the GS side and buy back their time. Didn't we already try this with the REDUX? I guess history repeats itself.
Some people mentioned the ROAD mentality and they are right. The problem is the new system will not fix that particular problem. The services need the ability to award bonus's for performance to keep people engaged. You have a huge group of people who know they will get paid but will never obtain another promotion. What incentive do they have not to go ROAD?
For those on the forum who are not familiar: ROAD - Retired on Active Duty
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09-17-2016, 03:35 PM
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#16
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,356
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Quote:
Originally Posted by trixs
a huge group of people who know they will get paid but will never obtain another promotion. What incentive do they have not to go ROAD?
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For some, all the incentive needed was an interesting, meaningful job and good colleagues.
Maybe I was just lucky.
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09-17-2016, 03:52 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
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Quote:
Originally Posted by trixs
I will hit 15 years with Big Blue in a few months. Obviously I have had many conversation regarding this very subject with people who are currently serving. The main point that is always highlighted is retention. Why would anyone stay in for longer than 10 years if they can obtain the same 401k matching, or better on the outside? I think most people will swap to the GS side and buy back their time. Didn't we already try this with the REDUX? I guess history repeats itself.
Some people mentioned the ROAD mentality and they are right. The problem is the new system will not fix that particular problem. The services need the ability to award bonus's for performance to keep people engaged. You have a huge group of people who know they will get paid but will never obtain another promotion. What incentive do they have not to go ROAD?
For those on the forum who are not familiar: ROAD - Retired on Active Duty
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I think the ROAD aspect of it (on the E side of the house) has been addressed with the modified HYTs and now having to meet a board for E-7. I think the days of being truly ROAD (prior to the coveted 18 years TOS 'sanctuary') are pretty much over.
All I can say is that's it absolutely wonderful being a member of the blue card mafia!
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FIRE'd in 2014 @ 40 Years Old
Professional Retiree
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09-17-2016, 04:03 PM
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#18
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Recycles dryer sheets
Join Date: Nov 2005
Posts: 165
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Quote:
Originally Posted by ExFlyBoy5
All I can say is that's it absolutely wonderful being a member of the blue card mafia!
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Ah, one day.. one day. Until then I shall keep having a good time!
I noticed that your profile says you live in Georgia. Add the username and I have to ask if you are previous JSTARS?
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09-17-2016, 05:24 PM
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#19
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,212
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Quote:
Originally Posted by trixs
For those on the forum who are not familiar: ROAD - Retired on Active Duty
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Thank you for that - I was very confused and coming up with a bunch of wrong acronym ideas.
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Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
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09-17-2016, 06:24 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Feb 2008
Location: Indialantic FL
Posts: 1,330
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Quote:
Originally Posted by mickeyd
Why?
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I'm of the opinion that TRICARE costs should be rising in sync with our COLAs (when we get them).
__________________
JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
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