New military retirement proposal:

[Smills91]

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http://www.military.com/military-report/two-panels-pushing-to-overhaul-retirement?ESRC=miltrep.nl

Yet another so called "debt reduction" panel has announced their proposal to overhaul the military retirement system. The bipartisan Debt Reduction Task Force, co-chaired by former Republican Sen. Pete Domenici and economist Alice Rivlin, offered a detailed plan for overhauling military retirement and TRICARE. Like the previous "blue ribbon" panel's proposal, the task force's plan includes steps to replace the current system with a new program that would allow members to retire after 10 years, but not start drawing pay until they reach 60 years old. However, the task force proposal would go further and tie military retirement to the government-funded Thrift Savings Plan (TSP) with vesting after 10 years. Read more about the task force's plans to reform military retirement.

What do you all think of this proposal? I actually think it'd be phenomenal for those of us in the Health Professions. Cutting the retirement "TIME IN" commitment in half would allow many to get out earlier and work on the private side after building up speed and getting experience. Also for those on the HSCP you'd have to find a way to add 2 years onto your commitment to reach retirement(or do reserves for a some years) to reach retirement status to get retirement at age 60.

I think that the opportunity cost of working as a dentist on the private side after gaining military training and experience would be very beneficial for a Dentist earning potential on the private side.

Other thoughts or opinions?

 

[umkcdds]

The retirement I would get for staying in for 20 years is already low enough to not be able to justify staying in that long.

Cut that amount of money in half and it's even worse.

It's funny how these jackasses don't look at their own pensions, within the federal gubment and the pensions within the unions, for cuts.

 

[krmower]

http://www.military.com/military-report/two-panels-pushing-to-overhaul-retirement?ESRC=miltrep.nl



What do you all think of this proposal? I actually think it'd be phenomenal for those of us in the Health Professions. Cutting the retirement "TIME IN" commitment in half would allow many to get out earlier and work on the private side after building up speed and getting experience. Also for those on the HSCP you'd have to find a way to add 2 years onto your commitment to reach retirement(or do reserves for a some years) to reach retirement status to get retirement at age 60.

I think that the opportunity cost of working as a dentist on the private side after gaining military training and experience would be very beneficial for a Dentist earning potential on the private side.

Other thoughts or opinions?

That would be a shame if they went with either of those options talked about. Taking the ealry out at 10 yrs would provide very minimal benefit - particularly if you had to wait till you hit 60 yrs old. I think that would actually be a dissinsentive to stay.

I'm happy with the current retirement system. Especially with TSP as a private "pre-tax" investment vehicl.

Being able to draw the pension the minute you get out creates an added measure of security as you choose what to do during the next phase of life - whether it's teaching in a dental school, full retirement, or private practice.

The way the systems have worked in the past, whatever retirement plan is in effect when you enter the military - that's the one you are eligible for. Those who come in later get whatever the new/current plan is. So even if they implement the program in a few years - it shouldn't affect those already in.

 

[Smills91]

That would be a shame if they went with either of those options talked about. Taking the ealry out at 10 yrs would provide very minimal benefit - particularly if you had to wait till you hit 60 yrs old. I think that would actually be a dissinsentive to stay.

I'm happy with the current retirement system. Especially with TSP as a private "pre-tax" investment vehicl.

Being able to draw the pension the minute you get out creates an added measure of security as you choose what to do during the next phase of life - whether it's teaching in a dental school, full retirement, or private practice.

The way the systems have worked in the past, whatever retirement plan is in effect when you enter the military - that's the one you are eligible for. Those who come in later get whatever the new/current plan is. So even if they implement the program in a few years - it shouldn't affect those already in.

I would think that the opportunity cost over those 10 years would equate to much more than the 40-60,000 a year you'd get in between your retirement age and 60. For me it would be 13 years. 750,000 dollars over 13 years roughly. In those 10 years of work, I'd imagine I could earn at least 75,000 more each year(if not substantially more) after getting out in '10 years'.

Question. If they implement the new plan and you're already 'in' can you pick and choose which retirement plan you'd want(historically speaking?).

 

[krmower]

I would think that the opportunity cost over those 10 years would equate to much more than the 40-60,000 a year you'd get in between your retirement age and 60. For me it would be 13 years. 750,000 dollars over 13 years roughly. In those 10 years of work, I'd imagine I could earn at least 75,000 more each year(if not substantially more) after getting out in '10 years'.

Question. If they implement the new plan and you're already 'in' can you pick and choose which retirement plan you'd want(historically speaking?).

At just under 10 yrs in, I am making about $190k/yr. I will get the military pension when I hit 20, plus I max out the TSP plan (403k plan they offer) and also Roth's for my wife and I as well as individual investments on a single income (wife is a home maker).

I enjoy what I do, have plenty of time off, and should have a retirement as well as - if not better than my friends in private practice.

If they offered the 10 yr deal - you would probably only get around $20k/yr from that at age 60. Which means if you got out of the Army at age 36-38 - you don't draw it for 22 yrs. Compared to the $60k+ you would get at the time you retired from a 20+ yr career (Age 46-48). Looking at that instant investable money that will act as a 2nd income on top of whatever else you decide to do - I still think it's a sweet deal.

Do what makes you happy - that's what it's about 🙂

 

[umkcdds]

At just under 10 yrs in, I am making about $190k/yr. I will get the military pension when I hit 20, plus I max out the TSP plan (403k plan they offer) and also Roth's for my wife and I as well as individual investments on a single income (wife is a home maker).

I enjoy what I do, have plenty of time off, and should have a retirement as well as - if not better than my friends in private practice.

If they offered the 10 yr deal - you would probably only get around $20k/yr from that at age 60. Which means if you got out of the Army at age 36-38 - you don't draw it for 22 yrs. Compared to the $60k+ you would get at the time you retired from a 20+ yr career (Age 46-48). Looking at that instant investable money that will act as a 2nd income on top of whatever else you decide to do - I still think it's a sweet deal.

Do what makes you happy - that's what it's about 🙂

really? you make over 100 grand more than me?

 

[krmower]

really? you make over 100 grand more than me?

Yep. Prior service guard time bumps my pay 2.5 yrs above where I would normally be. Language bonus bumps it $3600. BAH in DC is one of the highest. DASP at 12k, VSP at $1000 month, board specialty pay, and $50k multi year bonus.

 

[Truedat]

What language do you speak to merit 3600$

 

[Smills91]

At just under 10 yrs in, I am making about $190k/yr. I will get the military pension when I hit 20, plus I max out the TSP plan (403k plan they offer) and also Roth's for my wife and I as well as individual investments on a single income (wife is a home maker).

I enjoy what I do, have plenty of time off, and should have a retirement as well as - if not better than my friends in private practice.

If they offered the 10 yr deal - you would probably only get around $20k/yr from that at age 60. Which means if you got out of the Army at age 36-38 - you don't draw it for 22 yrs. Compared to the $60k+ you would get at the time you retired from a 20+ yr career (Age 46-48). Looking at that instant investable money that will act as a 2nd income on top of whatever else you decide to do - I still think it's a sweet deal.

Do what makes you happy - that's what it's about 🙂

How does the TSP work? I'm a 3rd year D-Student on HSCP with the Navy(active duty)...would I be eligible to start a TSP? If so, how does one go about it? Any other info on the program would be nice, thanks.

 

[Act0fgod]

How does the TSP work? I'm a 3rd year D-Student on HSCP with the Navy(active duty)...would I be eligible to start a TSP? If so, how does one go about it? Any other info on the program would be nice, thanks.

If you are active duty you should be able to participate in TSP. Go to https://www.tsp.gov/index.shtml it should have most of what you need. I think I had to fill out the fill out the Form TSP-U-1 and take it to my servicing finance office but you may be able to sign up completely online.

 

[Smills91]

If you are active duty you should be able to participate in TSP. Go to https://www.tsp.gov/index.shtml it should have most of what you need. I think I had to fill out the fill out the Form TSP-U-1 and take it to my servicing finance office but you may be able to sign up completely online.

Thanks. I called TSP today and they told me you can sign up on your mypay account online, however she mentioned that the military does not match your contributions. If they don't match, then what is the incentive of TSP withdrawals over other investment vehicles like IRA'S, Index Funds and Annuity's?

 

[Kabek]

If they don't match, then what is the incentive of TSP withdrawals over other investment vehicles like IRA'S, Index Funds and Annuity's?

The purpose is so you can put more money away in tax advantaged accounts. You can put an additional 16.5k a year away pre tax. Secondly, you have access to the absolutely lowest cost vehicles around as well as the G fund (great in your in fixed income portion of your allocation). If you don't need the space or invest in that fashion it might not be of use to you at the current time in your life.

 

[krmower]

What language do you speak to merit 3600$

Thai (Thailand). The language pay is based both upon the language you speak, and the score you get on the test. Some langauges don't get paid (Spanish) and depending on the score you get it affects the lvl of $$.

 

[krmower]

The purpose is so you can put more money away in tax advantaged accounts. You can put an additional 16.5k a year away pre tax. Secondly, you have access to the absolutely lowest cost vehicles around as well as the G fund (great in your in fixed income portion of your allocation). If you don't need the space or invest in that fashion it might not be of use to you at the current time in your life.

Also if you deploy you can put in up to $49k each calendar year tax free, and it grows tax free until you take it out. So if you deployed from October to April (6 months), you can put in up to $49k from Oct-Dec and another $49k from Jan-April since it runs off of regular calendar years, and not the military calendar year (Oct-Oct). The younger you are in your career when you deploy the more massive tax-free growth you could have.

You also don't have to withdraw it when you retire, so it can continue to grow, or you can roll it over into an IRA.

 

[dragonteeth]

Wonder if they've given any thought to what would happen to the leadership pipeline if that was put into action. If everyone bailed at 10 years, most of the "senior" folks would still be junior officers.