Can I make it on my military pension?

[samclem]

I think that deficit reduction will try to be accomplished with shared sacrifices. We have raised taxes on high income earners, put price controls on medical fees, and raised SS retirement to 67.

I understand what you are saying, and fully appreciate the need for shared sacrifice. But I want to shed light on the reasons that servicemembers and retired servicemembers may feel betrayed by this particular cut.

Preliminary step: What is a "contract?" From the mouth of Wiki (emphasis added):

"In common law legal systems, a contract is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them."

There is very little "voluntary" about taxes or SS, and this reduces the degree to which both parties are "bound." There's no contract, and the courts have made this very clear. On the other hand, a servicemember freely chooses to enlist and to remain under obligation in exchange for the compensation (including retirement pay) offered by the government. This is a contract, and you can be d*mn sure the government enforces every tenet of it against servicemembers very strictly.

The retroactive nature of the cuts is also a source of irritation. If a doctor doesn't like the future terms of Medicaid reimbursement being offered, he can elect not to participate in the program any longer. The military retiree has already performed the services and is just waiting for payment he/she earned. "Oh, you are changing the rules? Okay, where do I change my decision to re-enlist in 2006 and spend a year in Khandahar getting shot at and blown up with my team?"

There is a bitterness out there that neither Congress nor the public understands. It will linger, and it will have an impact. I think many military retirees would have been less POe'd if the same amount of money was taken as a specific extra tax, rather than some slicky "minor reduction" in the contractually obligated pay. We all understand Congress can change the tax code, it's far less clear that the way they are doing this is "right."

 

[Gatordoc50]

I understand what you are saying, and fully appreciate the need for shared sacrifice. But I want to shed light on the reasons that servicemembers and retired servicemembers may feel betrayed by this particular cut. Preliminary step: What is a "contract?" From the mouth of Wiki (emphasis added): There is very little "voluntary" about taxes or SS, and this reduces the degree to which both parties are "bound." There's no contract, and the courts have made this very clear. On the other hand, a servicemember freely chooses to enlist and to remain under obligation in exchange for the compensation (including retirement pay) offered by the government. This is a contract, and you can be d*mn sure the government enforces every tenet of it against servicemembers very strictly. The retroactive nature of the cuts is also a source of irritation. If a doctor doesn't like the future terms of Medicaid reimbursement being offered, he can elect not to participate in the program any longer. The military retiree has already performed the services and is just waiting for payment he earned. "Oh, you are changing the rules? Okay, where do I change my decision to re-enlist in 2006 and spend a year in Khandahar getting shot at and blown up with my team?" There is a bitterness out there that neither Congress nor the public understands. It will linger, and it will have an impact. I think many military retirees would have been less POe'd if the same amount of money was taken as a specific extra tax, rather than some slicky "minor reduction" in the contractually obligated pay. We all understand Congress can change the tax code, it's far less clear that the way they are doing this is "right."

I understand the bitterness and anger. I also believe, as I have said on many occasions, that existing pensions should be honored. I've also stated that DB plans are a disaster and should be winded down for obvious reasons. There will always be those that think DB plans are great as long as they are funded which is pretty silly. Any firecalc computation will show the futility of trying to plan for a specific benefit. I think my personal firecalc result shows me with somewhere between 300k and 8 million after only 30 years! Oh, and by the way, past returns are no guarantee for future results. : face palm:

 

[Theduckguru]

I actually am just looking for reassurance. I receive $3000 a month in pension after taxes and will have a monthly budget of ~ $3000 includes $300 a month into roth account and $150 into savings and 11-1200 mortgage. My wife will work and earn ~ $20,000 a year as a dental assistant and I plan to work part time completely on my terms to earn ~ $10,000 ebay seller or something on a golf course

I am sick of working 40 hour weeks and plan to spend more time doing what I want. I currently have $40,000 in roth IRA and will have 85-90,000 in savings when I sell my home.

I am 42 and looking at maybe 3 more years of corporate slavery. How doable do you feel this is considering my budget and income?

Thanks to those who responded to my questions on the introduction thread!! I would like to get further insight or suggestions from others as well.

Thank you in advance!
Devin

Duplicate

 

[Theduckguru]

I actually am just looking for reassurance. I receive $3000 a month in pension after taxes and will have a monthly budget of ~ $3000 includes $300 a month into roth account and $150 into savings and 11-1200 mortgage. My wife will work and earn ~ $20,000 a year as a dental assistant and I plan to work part time completely on my terms to earn ~ $10,000 ebay seller or something on a golf course

I am sick of working 40 hour weeks and plan to spend more time doing what I want. I currently have $40,000 in roth IRA and will have 85-90,000 in savings when I sell my home.

I am 42 and looking at maybe 3 more years of corporate slavery. How doable do you feel this is considering my budget and income?

Thanks to those who responded to my questions on the introduction thread!! I would like to get further insight or suggestions from others as well.

Thank you in advance!
Devin

No way. You do not even have close to the required assets you will need for future health care, let alone other expenses.

 

[Nords]

No way. You do not even have close to the required assets you will need for future health care, let alone other expenses.

I forgot to address another question in regards to our healthcare, our healthcare is through Tricare and cost $148 per month. This was figured into my projection of $3000 a month budget.

I think there's enough room in this military retiree's budget for Tricare. Its future enrollment fees are limited (by previous legislation) to rise at the CPI. Admittedly that's subject to change but a number of Congressional members and DoD staffers are still licking their wounds after battling out that compromise.

Duckguru, I know of at least two other military retirees who are enjoying life on less pension and lower savings. It can be done.

As nasty as the military pension "CPI-1%" surprise has been, I'm starting to see Twitter rumors from MOAA's day on Capitol Hill. Both Armed Services Committees seem to be a tad miffed at being cut out of the loop, and there might be a Senate amendment to the bill after all. If all else fails during this week of debate, the law won't take effect until December 2015. That's plenty of time (during an election year) for Congress to repent at leisure and work out a compromise with their (very vocal) constituents.

I ran some numbers on my own O-4 pension. Over the last 11+ years I would've lost $25K (which would have been invested and compounded to $30K). Over the next nine years (to age 62) I would have lost even more ground for a grand total of $100K. MOAA's numbers seem pretty good to me, and this whole plan smells a lot like REDUX. We old-timers know how well that little experiment worked out.

Speaking of Twitter, it was impressive to watch MOAA (on several different accounts) call out the Twitter handles of each member of Congress for everyone to send another 140 characters of feedback. MOAA has reached literally millions of servicemembers, veterans, and organizations through Twitter alone. Over 150,000 e-mails have already been sent to Congress (nearly 300 per member) and the other military advocacy groups are just beginning to rev up their campaigns.

 

[Pajaro]

I´m 5 years from military retirement and am very angry about this change. I stand to lose about $130k between retirement and age 62.

Even worse, this has a bigger negative effect on the lower paid enlisted folks who retire at age 37 or 38 than it does on the generals who retire close to age 62. I think this is the biggest crime. The E-7 who retires at age 37 after 20 years of service will have the reduced COLA for 25 years. A general might have no years of reduced COLA.

In addition, this will lead to a situation in which 2 people of different ages enlist on the same day, get promoted on the same days, and finally retire on the same day. They have done the exact same things over the course of their military careers, but the younger member will receive less in lifetime pension payments (if they die on the same day). That´s not right.

As much as I hate this change, I think the only fair way to implement some sort of reduced COLA (in addition to implementation for new members only) is to decouple it from age. Maybe all retirees get 20 years of reduced COLA, regardless of age. That´s basically how we do it for SBP premiums.

 

[timwalsh300]

Nords, thanks for the update. Regardless of how this plays out, I feel fortunate to have learned a couple big lessons early in my career: (1) what it felt like to invest real money into the teeth of a bear market in 2008-2009, and now (2) just how quickly our elected officials can alter military retirement benefits with what seems to be little or no protest from the general public. I will proceed with my plans carefully.

Tim

 

[braumeister]

it was impressive to watch MOAA ... and the other military advocacy groups are just beginning to rev up their campaigns.

Agreed. MOAA is one of the most effective lobbying groups we have, and I've always been very happy to be a member.

 

[Gumby]

I'm not. Compare the number of military retirees + active duty lifers to the number of people who won't be able to take the kids to Disney World this year or who will have to settle for a 3 series BMW instead of the 5 series because they have to pay the taxes to support those pensions. I think you can guess how that will always turn out.

For it's Tommy this, an' Tommy that, an' "Chuck him out, the brute!"
But it's "Saviour of 'is country" when the guns begin to shoot;

Rudyard Kipling

Kipling's Tommy Atkins (full poem)

To follow up on my earlier post, consider the following charts:

http://www.va.gov/vetdata/docs/quickfacts/Population_slideshow.pdf

and

http://www.census.gov/population/projections/files/analytical-document09.pdf

Combining them, one sees that the number of veterans as a percentage of the US population will fall from about 6.8% in 2010 to about 3.4% in 2040. With falling numbers comes falling influence. MOAA may be able to turn the tide this time, but the future looks grim.

 

[Theduckguru]

I think there's enough room in this military retiree's budget for Tricare. Its future enrollment fees are limited (by previous legislation) to rise at the CPI. Admittedly that's subject to change but a number of Congressional members and DoD staffers are still licking their wounds after battling out that compromise.

Duckguru, I know of at least two other military retirees who are enjoying life on less pension and lower savings. It can be done.

As nasty as the military pension "CPI-1%" surprise has been, I'm starting to see Twitter rumors from MOAA's day on Capitol Hill. Both Armed Services Committees seem to be a tad miffed at being cut out of the loop, and there might be a Senate amendment to the bill after all. If all else fails during this week of debate, the law won't take effect until December 2015. That's plenty of time (during an election year) for Congress to repent at leisure and work out a compromise with their (very vocal) constituents.

I ran some numbers on my own O-4 pension. Over the last 11+ years I would've lost $25K (which would have been invested and compounded to $30K). Over the next nine years (to age 62) I would have lost even more ground for a grand total of $100K. MOAA's numbers seem pretty good to me, and this whole plan smells a lot like REDUX. We old-timers know how well that little experiment worked out.

Speaking of Twitter, it was impressive to watch MOAA (on several different accounts) call out the Twitter handles of each member of Congress for everyone to send another 140 characters of feedback. MOAA has reached literally millions of servicemembers, veterans, and organizations through Twitter alone. Over 150,000 e-mails have already been sent to Congress (nearly 300 per member) and the other military advocacy groups are just beginning to rev up their campaigns.

The OP is age 42. I have a reasonable expectation that all retiree health care will be reduced as more baby boomers enter the pool. Tricare or not.

 

[Gumby]

As a 20 yr man myself, sometime in the next 5 yrs or so I expect (more or less depending on who gets control) the "Thank you for your service" stuff to change into "You are 'The HAVES" and we as a nation simply can no longer afford such gold plated opulent pay/pensions/medical care.... you will have to sacrifice like the rest of"

Yes. I have that much faith in this country

Nailed it.

In a document defending the cut, Ryan's staff called pensions to middle-aged military retirees "an exceptionally generous benefit, often providing 40 years of pension payment in return for 20 years of service" and noted that "most begin a second career after leaving the military."

My Way News - Bipartisan budget agreement nears final passage

 

[razztazz]

In a document defending the cut, Ryan's staff called pensions to middle-aged military retirees "an exceptionally generous benefit, often providing 40 years of pension payment in return for 20 years of service" and noted that "most begin a second career after leaving the military."

Like I said, I have faith in this country. Predictable like a castor oil addict

Remember that movie "The Best years of Our Lives"? Not to overstate the case or compare he average mil retiree with those who lost body parts but realistically if you do the "20" you have given up all formative years and yrs of climbing a career/economic ladder to the military. I'd say it's it's a supplemental wage for those beginning at or near the bottom. (Yes, some can convert quite easily but they can't guarantee. It's sort of a gamble) Also, and you never hear this anywhere, the "pension" is never referred to as a "pension" on the inside except around the water cooler. By law unless they've changed it, it's "retirement pay" and it is called that because it functions as "retainer pay" until age 55 or that point at which you would have had 30 yrs active duty.

So, now to massage this they play games with language. Look into mein eyes.. you are getting sleeepy.... sleeeeeepy....

 

[2soon2tell]

I wonder if veterans disability compensation colas are next on the chopping block?

 

[oldtrig]

looking for reassurance ?

I am age 66 with a heck of a lot more in money and property than you and I am still worried. It looks like cuts are coming. Military is going to be hit hard. Not sure they will mess with your benefits but then again I am not sure five years from now I will be getting my SS.

If I were you I would find something I really enjoy doing that pays decent money and keep working. Take you military pay and invest. I wish I could tell you where but I think you will find a way. Working is retirement for some people that look forward to going to work each day. That dream job could be waiting on you now.

I retired because I felt I had done my part in the working life. I was in the workforce for 48 years and it comes a time we just have to let younger people have our jobs.

By the way you mentioned working part time at maybe a golf course. I retired as a golf course superintendent. We only worked one full time worker who was a skilled mechanic. The rest we worked only in season and paid them $8.00 an hour. No way any of our workers made $10,000 a year so good luck on that. I am sure you could make more in some area's but the cost of living would be much more for you also. As a rule the golf industry has took a big hit in the last 10 years. Check around and you will see what I am talking about.

I do wish you good luck. You are still a young man with many years ahead of you. Also thank you for your service to our country. oldtrig

 

[haha]

Nailed it.



My Way News - Bipartisan budget agreement nears final passage

My late father in law drew an O-6 pension for just short of 50 years. During this time he used a PhD that he picked up along the way in his career to become a tenured professor and pick up another lifetime pension, later retired form this and got another real job in a Community College. He finally retired from teaching in his late 80s, and died recently at 98. Not that he hadn't had a distinguished career, he had. With all-in combat roles in two wars. But he sure didn't need money, which seems to be becoming one of the criteria for who should or should not get money passed to them at public expense.

But he sure lived well- always a nice late model Porsche or Mercedes or BMW and sharp clothes.

Ha

 

[Gumby]

There seems a fundamental difference between saying:

A) as a society, we want financially to help group A (the homeless, the hungry, fashion victims, what have you) and we can set the level of help to the level of financial need; and

B) if you serve in our military for 20 years, we'll give you this COLA'd pension for the rest of your life.



Case A may be a noble sentiment and a societal moral obligation, but it will almost certainly be subject to the whims of the political process and the state of the government purse.

Case B is a contract. It is not typically a defense to a breach of contract suit that the other side does not need the money you were supposed to pay them.

 

[haha]

There seems a fundamental difference between saying:

A) as a society, we want financially to help group A (the homeless, the hungry, fashion victims, what have you) and we can set the level of help to the level of financial need; and

B) if you serve in our military for 20 years, we'll give you this COLA'd pension for the rest of your life.



Case A may be a noble sentiment and a societal moral obligation, but it will almost certainly be subject to the whims of the political process and the state of the government purse.

Case B is a contract. It is not typically a defense to a breach of contract suit that the other side does not need the money you were supposed to pay them.

I do not disagree. Nevertheless, when things get tight expediency gets a hearing.

Contracts were never meant to enshrine decisions which have become questionable for eternity.

Ha

 

[nash031]

I don't think so. The changes in the Federal system were done on a "from now on, current employees will..." basis. The present Murray-Ryan deal has the same thing--current federal employees get reductions in their retirement credits from this point forward. The cuts to military retirement that are in the soon-to-pass deal cut the already-earned retirement pay of servicemembers who are already retired. That's a different deal entirely. This retirement pay is simply deferred compensation that was part of their total compensation package when they were out there performing the tasks that the nation asked. Now, after they met their end of the bargain, this pay is going to be reduced. It's a failure to pay for services that were already performed. For those retiring today at 42 YO, it will result in an approx 18% smaller monthly retirement check when they are 61 YO. The promise now is to restore the cut money when they turn 62, but I can't see why anyone should expect that promise to be kept. 62 will become 65, 65 will become 67 (the individual's "full retirement age" for SS), etc.

Very little talk about this cut in the press, and the House sure pushed it through amazingly fast after. A final vote is expected in the Senate next week. There's some signs of pushback on this particular provision on both sides of the political spectrum, but it would take more pressure to cause any real modifications before a vote. If it isn't changed/stripped out before a vote, it never will be.

Calculated today: an 11% total reduction in the first 20 years for my benefit (starting in 2020). That's total value of the benefit; at the 20 year point, the benefit is reduced by 18% for that year alone. And they proposed and voted on this in about a week. $6 billion in savings over 10 years, and this is the best way they could make those savings? By kicking the problem down the curb a little bit at the expense of those already done serving??

 

[nash031]

Contracts were never meant to enshrine decisions which have become questionable for eternity.

Maybe not, but they're also not meant to be shoved aside and overrun in the middle of the night by sneaking it in a budget bill. The personal equivalent of this is financing a house, then going to your lender after the first year of payments on a 30-year loan and saying: "Your interest charges no longer fit into my budget, therefore I will no longer pay them. Thank you for your cooperation and understanding. I really appreciate it!"

 

[target2019]

Doesn't the contract allow for USG to change terms?

 

[mcdevin1970]

Sorry, it's been a while since I visited this post. Tons of good info from all of you! I appreciate it.
Yeah, it's funny how confident I was in my pension when I originally posted this....now, not so much. Very sad that our government could stoop to such a low level and try to steal promised money away from those who sacrificed so much.
I am a little disappointed in a couple of the responses from folks who seem to feel that the military pension should be on the table just as everything else is during budget talks. Samclem really made some valid points to dispute this.
Regardless, i will find a way to cut down on my work hours and enjoy my life. Life is too short to spend 40 hours a week doing something other than what you want to be doing.

 

[jimnjana]

I wonder if veterans disability compensation colas are next on the chopping block?

They are included already in the current "deal"
[mod edit]http://www.breitbart.com/Big-Govern...n-deal-two-days-before-House-vote-did-not-fix

 

[Rustic23]

"Contracts were never meant to enshrine decisions which have become questionable for eternity."

It's been a while since I studied Contract Law, but it seem to me that is exactly what a Contract means. Well, maybe not eternity, but certainly for the life of the contract. Many businesses, governments and individuals make stupid decisions that are enshrined by a contract and they have to live up to them. I can't imagine how NFL, or other pro ball players would feel if their employers unilaterally changed their contracts, and then said, 'by the way you made a commitment and you have to server out the rest of that time'

The military is, and has been. an easy shot for politicians. Very few politicians have large number of military in their districts, and many that are, vote in some other district.

 

[oldtrig]

Calculated today: an 11% total reduction in the first 20 years for my benefit (starting in 2020). That's total value of the benefit; at the 20 year point, the benefit is reduced by 18% for that year alone. And they proposed and voted on this in about a week. $6 billion in savings over 10 years, and this is the best way they could make those savings? By kicking the problem down the curb a little bit at the expense of those already done serving??

Thanks for sharing this info. I now understand it is not going to be as bad as I first thought. Sort of like taking SS AT 62 or waiting until 66. There is no doubt which route I would take if I were retiring from the military this year. Most will never even notice the pay cut. Is this cut in stone as of 1-1 2014? or is this a rumor?

 

[oldtrig]

Sorry, it's been a while since I visited this post. Tons of good info from all of you! I appreciate it.
Yeah, it's funny how confident I was in my pension when I originally posted this....now, not so much. Very sad that our government could stoop to such a low level and try to steal promised money away from those who sacrificed so much.
I am a little disappointed in a couple of the responses from folks who seem to feel that the military pension should be on the table just as everything else is during budget talks. Samclem really made some valid points to dispute this.
Regardless, i will find a way to cut down on my work hours and enjoy my life. Life is too short to spend 40 hours a week doing something other than what you want to be doing.

I again wish you luck in working under 40 hours a week at your age. Sometimes in life we have to do things we do not like. [mod edit]