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since we have more than a few bright folks in here, i was wondering if there are any unique investment opportunities or advantages to being in the military.
medicine1 said:I have the HPSP scholarship, and I see many benefits besides the fact that I get to serve my country. My education time is counted towards Retirement time. And if I do a residency through the Air Force, I am considered active duty, and receive full military benefits, including base housing. I would also receive a higher pay than my civilian colleagues. I get to spend more time with my family, and more time to study. By the time I serve my obligation of 4 years, I can stay for another seven, and then retire (4 years of D.O.school, 5 years of residency, 4 years of obligation time, plus 7 years of continuous active duty service=20 years). After I retire, I can open up my own practice, or join a civilian hospital/clinic and make two incomes. (retirement pay + current work pay)
medicine1 said:I have the HPSP scholarship, and I see many benefits besides the fact that I get to serve my country. My education time is counted towards Retirement time. And if I do a residency through the Air Force, I am considered active duty, and receive full military benefits, including base housing. I would also receive a higher pay than my civilian colleagues. I get to spend more time with my family, and more time to study. By the time I serve my obligation of 4 years, I can stay for another seven, and then retire (4 years of D.O.school, 5 years of residency, 4 years of obligation time, plus 7 years of continuous active duty service=20 years). After I retire, I can open up my own practice, or join a civilian hospital/clinic and make two incomes. (retirement pay + current work pay)
medicine1 said:I have the HPSP scholarship, and I see many benefits besides the fact that I get to serve my country. My education time is counted towards Retirement time. And if I do a residency through the Air Force, I am considered active duty, and receive full military benefits, including base housing. I would also receive a higher pay than my civilian colleagues. I get to spend more time with my family, and more time to study. By the time I serve my obligation of 4 years, I can stay for another seven, and then retire (4 years of D.O.school, 5 years of residency, 4 years of obligation time, plus 7 years of continuous active duty service=20 years). After I retire, I can open up my own practice, or join a civilian hospital/clinic and make two incomes. (retirement pay + current work pay)
While you are correct in some ways about the GI Bill, there are some things you are wrong about, and there are some things that won't apply to many of the people on these forums considering entering the military to pay for medical school.sge1970 said:Also, if you put into the GI Bill you can use it down the road in case you wanted to get an MBA, JD, other graduate degree or you can pass it on to your kids. I signed up for it in 98 and the $1000 I put down is paying my $1200/month non-taxable pay in med school + HPSP!
Croatalus_atrox said:While you are correct in some ways about the GI Bill, there are some things you are wrong about, and there are some things that won't apply to many of the people on these forums considering entering the military to pay for medical school.
Military members are only entitled to pay into the GI Bill system if they have not received any type of military educational assistance before they enlisted or commissioned. If you are receiving the HPSP, attended a service academy, or had ROTC pay for your schooling, then you are ineligible to sign up for the GI Bill for later educational use. You can use GI Bill benefits and the HPSP at the same time, as you are doing, but you had to have enrolled in the GI Bill, and been fully vested in it, before you applied and were accepted for the HPSP.
Although Congress passed the Natl Defense Authorization Act in 2001 that allows for the transfer of GI Bill benefits to your dependents, the eligibility for that program is determined by the services, who designate critical specialties for the program. To date, none of the services have implemented the program, so you cannot transfer your benefits to your dependents as you claim. In the future, other military members may be able to transfer their benefits once the provisions of the NDAA are enacted by all the services, but you cannot.
Current Active Duty GI Bill benefits are capped at $1004, if you are not receiving a kicker or receiving the Army College Fund. You must be receiving one of those two payment supplements if you are making $1200/mo from the GI Bill.
militarymd said:IRR time does not count towards retirement. HPSP scholarship time does NOT count toward retirement
spc213 said:At least for the Army, your statement is not entirely true. For an "Active Duty," 20-year retirement, you are correct, HPSP does not count.
However, if you seek a Reserve retirement, "retirement credit (up to 50 points per year) may be authorized for up to four years of time spent in HPSP for participants..." (HPSP Handbook 11/04). The key here is that 50 points equals a "good year" for a reserve retirement. This may be appealing to those with prior service or those who plan to enter the Selected Reserve after completing their active duty requirements.
12 "Good years" credited toward a reserve retirement (4 IRR/HPSP years + 4 Active + 4 Selected Reserve) can make a big difference, vs 8 "good years," if you are trying to make a decision to stick it out for a retirement or not.
I am not trying to split hairs here, but there is a difference; and telling people that HPSP doesn't have any retirement value could lead someone to make an uninformed choice.
Croooz said:When discussing retirement, reserve retirement is rarely discussed because that doesn't start till you're at least 59.5 years old. If you're going to inform people lay at least the major points on the table.
DaveB said:So let me get this straight: when I go on active duty, I will no longer be able to contribute to my traditional 401k, but I will be able to contribute to a Roth IRA?
1) From a regular line O-3: militarymd's advise is solid.edmadison said:No, you will not be able to contribute to your 401k -- that's offered by your employer, once you stop working for them, you can no longer contribute. The military does have a version of the 401k called the Thrift Savings Plan. Unfortunately, there is no matching, but hey at least there is something. You can continue to do your Roth and, as previous posters have said, should contribute the maximum to that before any into TSP.
Ed
If you do a military residency, then that is active duty and the years spent in residency will count toward time in service when calculating your base pay. A good site for calculating your take home pay after taxes is this one, but it won't do any specific military calculations for you:aatrek said:when calculating your Basic pay, does years of residnecy (reserve basically) count as "year in serivce", or is that just acitve?
and does anyone know a good pay calculating site? fo some reason all the websites that were listed in prior threads are inactive
thanks
a
Sledge2005 said:If you do a military residency, then that is active duty and the years spent in residency will count toward time in service when calculating your base pay. A good site for calculating your take home pay after taxes is this one, but it won't do any specific military calculations for you:
http://www.paycheckcity.com/
If you want to calculate what you'll make in the military, just search through some old threads and you'll find the info you need. All you need to do is find the 2005 pay table which is online, and then search for the old threads which will tell you which pay you're eligible for.
aatrek said:thanks for the reply, but how about if you did residency civilian but were in the reserves at that time (FAP). Do those years in the reserve count?
thanks for your help
A
aatrek said:when calculating your Basic pay, does years of residnecy (reserve basically) count as "year in serivce", or is that just acitve?
and does anyone know a good pay calculating site? fo some reason all the websites that were listed in prior threads are inactive
thanks
a
thanks for the pdf file.denali said:Recommend you refer to this reference when determining years of creditable service for pay purposes: http://www.dod.mil/comptroller/fmr/07a/07A01.pdf
aatrek said:thanks for the pdf file.
If am reading it correctly, it seems like reserve years do count for pay (countrary to the comments above????) ??
denali said:Yep, Reserve time counts for pay purposes. However, any time spent under HPSP/USUHS/FAP is not creditable for pay purposes.
militarymd said:You mean "active reserves" ....ie drilling reserves.
HPSP/FAP are inactive reserves....so those years don't count towards pay purposes.
USUHS are active duty....so their years count towards pay purposes??????...but not for retirement....but than they count after reaching 20 years of other service.
Sounds confusing??? Get used to it.
So, I guess since this is a thread on finances I'll ask some questions so it is more relevant (though not much seems to have changed).
In 2011 as a new O-3 (hopefully) right out of medical school how much am I expected to earn? I have seen figures, including all special pays and what not at ~$72,000.
So, any advice for a 23 year old who is trying to be optimistic about his finances in the military in a few years, or even as an HPSP student?
(and it does suck that retirement is based on base pay. I explained this to my dad, who is retired career who thinks it is the best system ever that it is genuinely an unfair system. Sort of the military's last "haha gotcha! fool!" before you leave it)
You can tack on 8-10% for pay raises over the next 3 years, plus add any special pays to that total. Your BAH and BAS are not taxable.
You mentioned rent. Depending on how long you anticipate being at your first duty station, consider buying. Renting is almost always more cost effective in the short-term, but the longer you stay somewhere, buying becomes more fiscally solvent because of both the tax break on the mortgage interest as well as the (expected) capital gain on the property.
Don't know who is paying you, but I certainly have not been seeing this much increase. More like 2-4% for base pay over the past couple of years. In addition, your ASP and VSP hasn't changed since God knows when.
In fact, pay increases are not even keeping up with inflation!
I always struggled with this. How long do you consider staying in the same area to make it beneficial to buying a house? Also, with the housing market currently in the dumps, buying may not be wise for the next year or so. Hopefully, the market will rebound one year or so from now.
Don't know who is paying you, but I certainly have not been seeing this much increase. More like 2-4% for base pay over the past couple of years. In addition, your ASP and VSP hasn't changed since God knows when.
In fact, pay increases are not even keeping up with inflation!
if tsp is all or nothing (stay 20yrs or you dont get what you put in) why would the MDs do it? Most dont stay in for 20 and lose out on 64k.
I would still recommend Vanguard over all of them though. By far the cheapist way to go and least expensive to operate year after year.
For you reservists that actually haven't lost your practice due to deployments, or you are in a small group. Consider getting a $4000.00 deductable health care plan then get an HSA. You can invest the HSA contributions, they're tax free, and if you don't use them for health care, you can draw them out I think at age 60 and they'll be taxed like a regular IRA.
Doctors have a unique advantage with an HSA because they can probably get an office buddy to treat them and their families for the nickle and dime stuff and really don't need to let an HMO shake you down every month, just for the privilage of getting the kid's diaper rash treated . While it's true, your income may eventually push you out of eligibity for many of these programs, a lot of you will qualifty, especially if you're working in some socialist utopia like Vermont make squat as an F.P.
You have to consider what a rip off some 401K can be. They charge 2 or more percent management fees and it's really hard to get your money out in an emergency where as with the Roth it's not as hard.
Between you, your wife, and the HSA, that's somewhere near $1300.00 monthly you can sock away with little or no tax liablity using after tax dollars.
And oh yeah, you're actually going to trust the army with your thrift money ? They can't even resist the urge to stop loss you pass your ADSO, and you want to hand over your hard earned money to them for self keeping ?
Let's see if I can address a few of the misconceptions here.
1) Vanguard is not cheaper than the TSP. In some cases, it is ten times as expensive with higher minimums. Consider the I fund (ER 0.015) and the Vanguard Developed Markets Index Fund (ER 0.22). Both invest in the same companies and track the same index. But one is over ten times cheaper than the other. I love Vanguard, but the TSP funds are even better. Vanguard's mutual funds are extremely low cost, but its brokerage service is frequently complained about even by Vanguard diehards. The commissions are much higher than can be found elsewhere. I suspect this is because they prefer to stick with their area of expertise (low-cost mutual funds) rather than grow the brokerage business (which doesn't benefit Vanguard's owners, which are the owners of its mutual fund shares-you and I).
2) Bear in mind that active duty docs can't do an HSA (you implied this but didn't specifically state it.) You have to have a high deductible health plan to do an HSA (which tricare is not.) Those who can do an HSA shouldn't actually spend it on health care (although you should max it out). Spend your regular earnings and use the HSA as an extra IRA.
3) Many docs wouldn't consider doing a high deductible health plan/Health savings account because they actually have very good health insurance provided by their employer instead. But I suppose if you're buying it yourself, it's your decision.
4) Many 401Ks (not the TSP) are a huge rip-off not only because they offer loaded funds (ugh) and high-ER funds (ugh ugh) but also because there are often hidden fees in addition to these. It really pays to read your 401K documents and understand all the fees. It also pays to lobby your employer to provide a good 401K. Even if you have a truly awful 401K, you want to make sure you contribute enough to get the maximum match (free money). If fees are greater than 1.5-2%, you're probably better off investing tax-efficiently in a taxable account than that 401K (after the match of course), unless you anticipate leaving the job within 5-10 years when you could roll the money into an IRA.
5) The TSP isn't managed by the army. In fact, its independent board of directors is perhaps the most highly watched in the world. They do an exemplary job of consistently lowering expenses, not performance chasing by adding the latest hot asset class, and cutting down on transaction costs caused by frequent trading. If you really don't trust the TSP, you can always roll it over to an IRA when you leave the service, which is usually pretty quickly for most of us. In fact, if you stuffed a lot of tax-exempt money in there, you may be able to do a pretty low cost Roth IRA rollover the year you leave service.
6) Can you name any docs that have been stop-lossed in the last ten years? I can't and I've been hanging around this forum for 8 or 9. I'd think if someone had been stop-lossed, someone here would know about it. Military medicine is bad enough without making up new problems. Not to say it couldn't happen, but I don't think it has happened yet.