Grumble

The law of compound interest says that 0.5% (which is a 20% cut) is a lot of money. Any way you spin it, it's a sizeable reduction in benefits for anyone going to 20.

Tao of Funk

Now I'm going to have to start checking this thread twice a day.

GoCats67

There won't be another vacancy bid until the current displacement closes and the results are posted. (at the earliest) It doesn't close until the 21st and the results usually take a couple of days, so go take a week at least.

Hopefully after the displacement results are out, we will get the next bid addressing the DCA 787 and rumored DCA 737 growth. If that actually does come out, then we will see some movement in the right direction that should result in many unfilled vacancies at the bottom.

Andy

I realize it's a big cut, especially for enlisted retirees. It's offset a bit by the matching TSP funds.

But there's still a pension there; it's not completely gone.

flensr

Risking propriety by jumping in here with some perspective on the military retirement comments...

There's a silver lining in every cloud, and it will be interesting to see how "the market votes". I expect we will see an increase in veterans who got out between 10-15 years, and those guys are going to benefit quite a bit under the new system. Its a problem that has been needing some attention for decades.

The "yes but..." part is that a military retiree who was disciplined enough to max out their TSP for their entire 20 years is going to retire with well over a million bucks in there, quite a bit of that "free" money due to the match.

Yes, that same retiree will get a much lower pension from age 40 to when he can draw TSP (59?) but even someone who elects to start their second and final retirement "early" could be looking $3-4 million bucks in TSP.

For the guy who separates from the military before 20, they'll still have their TSP including match, compared to now where someone who gets out before 20 gets nothing but TSP with zero match.

The new system dramatically favors those who get out before 20, and is a HUGE improvement for those who get booted out during a RIF or from getting passed over twice. Again, this has needed attention for decades. In the AF specifically, a passed-over Major faces mandatory separation somewhere around the 17 year point, which is a kick in the balls especially if they went to the zoo or were prior enlisted since that represents 21 or more years of voluntary service and no pension or medical benefits to show for it.

As for the guys who stick it out to 20 getting screwed... This won't be the first time the military has to cope with huge manning problems caused by troops bailing out far earlier than the personnel forecasters expected due to reductions in the retirement benefits. If too many people get out before 20, expect the compensation to come back up (remember the REDUX fiasco from a couple decades ago...)

Personally, I think the attacks on military retiree medical benefits are far more worrying. A retiree can usually get a job to replace income but coping with medical problems that result from military service is a lifelong struggle.

Andy

You are using some extremely aggressive compounding there, not to mention ignoring inflation to come up with those numbers. Putting away $18K every year for 20 years at 9% interest gets you ~$1M in future dollars.

sherpster

I keep checking this thread hoping for some glimmer of hope for a new hire class. Oh well. Anyways, back to the TSP discussion.

Airhoss

Relax....

Hiring resumes in September.

flensr

18k (max contribution should keep increasing but we can assume 18k...) per year for 20 years at 7% will get you somewhere around $800,000 at military retirement. Assume that money sits untouched for the next 20 years until "real" retirement, and it'll be over 2.8 million bucks. Thats at just 7% and assumes zero retirement investing between military and "real" retirement. Continue the 18k investment for a full 40 years and even at just 7% it'll be over 3.5 mil.

APC225

Interesting numbers. Under the traditional pension you'd get half of O5 $8754 at 20 years of $4377 per month. In order to get that same amount from an investment returning 7% you'd have to have $750k principle to start. Pretty darn close to your $800k. Some differences. Traditional pension has no risk so it's like a t-bond paying 7% on $750k. The individual can't screw that up and the market doesn't affect it. If the return on investment is only, say, 3% though, the 401k pays less, while the traditional keeps paying the same, now like having $1.7m in principle. Only 55% of traditional can pass to spouse, and that's after paying premiums for 30 years. 401k is all inheritable. Traditional has annual inflation adjustment, protecting its value over time but it's immediately taxable while 401k has tax advantages until withdrawal. I guess the biggest difference is that the $800k 401k was paid for by the individual to start with. The traditional pension is a benefit for serving. If someone with a traditional pension had the discipline to sock an average of $18k per year away during 20 years of service, then retire with the pension they'd be very well off. That might be hard to do through the first few years of lower pay scales.