Army "Right Sizing"

[Spekkio]

RLSO, I agree there. I was speaking toward the future retirement reform discussions that are probably on the horizon for personnel who have not enlisted yet, not changing the game on people who are in. You push retirement off until 62 or 65 or whatever for future enlistees, then you're not giving people a whole lot of financial incentive to stay in past an initial enlistment. Patriotism only goes so far when you need to be able to feed a family.

I think in general we do a poor job of setting realistic expectations for our soon to be retirees, but I do think making them aware of true expectations is something that is fixable.

Well, I don't think saying something like "You should go career, BM3. At the end of your 20 years, you can retire as an E-7 and make $26,000/year pay and if you luck out you can get a full-time job at Jiffy Lube making another $30-35k.* That's much better than getting out at 22, using the GI bill, and climbing the ladder at a private company."

*This is a real-life example.

 

[Spekkio]

Good points... let me elaborate on Case 1: I would say he is a patriot, a hero, worthy of being held up before the eyes of an adoring nation... and that his financial compensation for volunteering is probably overly generous. Two decades of health care including 3 kids worth of broken bones, etc, on Tricare, financial security while raising his family (layoffs are scarce), highly compensated for the marketability of his skillset, VA benefits including zero down home purchase, mil pension+second career 401k+social security... I think he can work at Home Depot at 44 and will be working alongside other similarly skilled people with families and will make twice as much with the pension while doing it. Do you think it's likely that the average Case 1, if he had not joined the military, would be in any better financial position at age 44 with 3 kids? I'm not sure. I think we owe our freedom to people being willing to be in Case 1, but I also think he is very, very well taken care of given his statistically probable alternative earning potential if he were not accepted for some reason as a teenager, and that he repeatedly re-upped to continue down the Case 1 track. Overall, I am FOR the current pension, but just saying.

I think that if you factor in the lack of equity he has in a home from moving often (if he even bought one), the career earning potential his spouse takes for moving often, and the step back that he has to take earnings-wise at 44 years old evens out his 'highly compensated skillset' (your words, not mine). And that doesn't consider the fact that he might have bought a house in '00-'03 and sold after the crash due to PCS orders. I think that had he not made the military a career, his household income would probably be similar if not more (everything else being equal, it's got a 50% chance of being above $62k in inflation adjusted dollars) even if he wasn't the only one making the money.

 

[exNavyOffRec]

RLSO, I agree there. I was speaking toward the future retirement reform discussions that are probably on the horizon for personnel who have not enlisted yet, not changing the game on people who are in. You push retirement off until 62 or 65 or whatever for future enlistees, then you're not giving people a whole lot of financial incentive to stay in past an initial enlistment. Patriotism only goes so far when you need to be able to feed a family.

Well, I don't think saying something like "You should go career, BM3. At the end of your 20 years, you can retire as an E-7 and make $26,000/year pay and if you luck out you can get a full-time job at Jiffy Lube making another $30-35k.* That's much better than getting out at 22, using the GI bill, and climbing the ladder at a private company."

*This is a real-life example.

I would say that they need to be briefed that they should plan for a pay drop if they stay to retirement and by the time they get to that point whether it is 20 or 24 or ??? that they should have ideally no credit card debt, no car payment, nothing but rent or mortgage, and have savings to draw from.

I would call this a "mid career brief" say at about 12 years.

In regards to the BM3 I would have asked him what his goals were, if he wanted to stay in great, if he wanted to get out that is fine too, if he wants to stay I would ask him what he wants to do when he eventually does get out and if he has a plan in place.

I know many that got out after one or two enlistements, some I wish would have stayed, some leaving was the best choice for both parties, I have been surprised at how well some are doing, of course I am sure that there are some that aren't doing great but I would never tell someone "you need to stay" if they really wanted to get out.

Oddly enough I know someone that got out as a BM3 went to college and is now with NCIS as a GS13, maybe it was GS11, I asked if they had cool phones like the TV show, they don't, they had the same phone as my 94 year old grandmother.

 

[PhrogLoop]

...take your $70k+ in GI bill benefits...

I agree with the + in "$70k+." I'm using my Post 9-11 GIB right now in a top 10 MBA program to the tune of about $100k.

 

[PhrogLoop]

I've been mulling this one over for a while, so bear with me. I'll be damned if I start crying over broken promises made to me about pay and retirement benefits. I feel that every day that I have served after my initial obligation was a privilege for me. Does this COLA trick short me $100k over my expected lifetime? Maybe. But in which other line of work can a mid-career professional completely retool him/herself with a free world-class education like the Post 9-11 GIB? How many Greatest Generation members went back to school and then went on to lead industries? How much more can we do with what we've experienced and learned in 12 years of war? Learning how to do my own equity valuations from scratch was hard. Learning how to fly was harder. All nighters writing a 100 page paper with team members from other time zones was hard. All nighters at SERE were harder. So for me, I'll just chalk up the uncertainty over exactly how much I will make in retirement to the cost of doing business as a GI (government issue) stiff and count on myself to make up the difference in the field of my choosing when I retire at 20. And not a day longer.

 

[smoke_screen]

I think that if you factor in the lack of equity he has in a home from moving often (if he even bought one), the career earning potential his spouse takes for moving often, and the step back that he has to take earnings-wise at 44 years old evens out his 'highly compensated skillset' (your words, not mine). And that doesn't consider the fact that he might have bought a house in '00-'03 and sold after the crash due to PCS orders. I think that had he not made the military a career, his household income would probably be similar if not more (everything else being equal, it's got a 50% chance of being above $62k in inflation adjusted dollars) even if he wasn't the only one making the money.

I would say that if you price out a lifetime annuity paying inflation-adjusted defined benefits equal to Case 1's pension, starting at age 44, let's just say I doubt he would have been able to save up enough $ to purchase it at age 44, in any scenario. Also I think his family lived a heck of a lot better under the Tricare umbrella in the meantime, in addition to his nearly six figure compensation pkg (with tax benefits considered and assuming 25% marginal tax bracket) than if he were changing oil, or whatever. Oh yeah and great point Phrog, the GI Bill, his oldest is off to college without his worrying about it. Who knows, but I think its a no brainer to reduce benefits for new recruits to a more reasonable (with current life expectancies) benefit package.

 

[exNavyOffRec]

I feel that every day that I have served after my initial obligation was a privilege for me.

Many don't think like you and just view this as a job, and to be honest I have met several senior enlisted (E-9's) who's goal was to stay as long as they could to get the biggest retirement check they could and not work, those are guys who may have not stayed if things with the retirement system were different.

Does this COLA trick short me $100k over my expected lifetime? Maybe. But in which other line of work can a mid-career professional completely retool him/herself with a free world-class education like the Post 9-11 GIB? How many Greatest Generation members went back to school and then went on to lead industries? How much more can we do with what we've experienced and learned in 12 years of war? Learning how to do my own equity valuations from scratch was hard. Learning how to fly was harder. All nighters writing a 100 page paper with team members from other time zones was hard. All nighters at SERE were harder. So for me, I'll just chalk up the uncertainty over exactly how much I will make in retirement to the cost of doing business as a GI (government issue) stiff and count on myself to make up the difference in the field of my choosing when I retire at 20. And not a day longer.

I would say you as an officer are a different catagory, I can't tell you how many people I STILL meet that are surprised that there are enlisted members with college degrees, I have had people just assume I was an officer because of my degrees and then are surprised when I tell them I was a Chief, the assumptions that civilian employers have with enlisted is what is hurting us.

FYI, when I started looking for a job and went to job fairs I was directed to the 30K to 40K a year jobs that they were directing all enlisted to, many of the companies that are looking to hire veterans fit them into 2 groups, the officers looking for jobs, and then the enlisted looking for jobs.

I was turned down from a job because they were looking for an officer, specifically an officer getting out as an O-3, no specific degree required. I know the person they hired, I had more experience and higher education, I would have started at the lower end of what they were looking to pay as well. (yes I was a bit bitter about the entire thing)

 

[Spekkio]

in addition to his nearly six figure compensation pkg (with tax benefits considered and assuming 25% marginal tax bracket)

Huh?

E-7 @ 24 year pay is just over $54,000/year. Special pays might add another $10,000 (I'm not familiar with how the Army does them), but those are taxable anyway. He's $8,000 short of having any money eligible for being taken out at the 25% tax rate, and that doesn't include deductions. So even if BAH were taxed, only about half to 2/3 of it would be taxed at the 25% rate because you only pay the higher rate on dollars made over the threshold. The first $17,850 would be taxed at 10% and the rest would be taxed at the 15% rate. At a $20,000/year BAH rate, his 'tax advantage' gives him an extra $4,000 a year using 15% on the first $8k and 25% on the next $12k. Nothing to sneeze at, but it doesn't put him over the six figure mark.

The biggest tax advantage is being stationed in a state with a big income tax like CA, but being exempt for being a non-resident. But that really only comes into play if the person would be living there if he weren't in the military.

But he's paying his BAH to Balfour Beatty or whoever, and Joe Schmo is writing off his mortgage interest on his taxes while building equity in property.

 

[pilot_man]

It doesn't matter if your example 2 Sailor never saw the ocean, let alone combat (however it's defined today). He took a job (several times if you count re-enlistments) with mutually agreed upon compensation assurance. If changing the rules now is what makes financial sense - start with the recruiting office now, not the guys who have been re-upping and re-upping under a different set of rules.

This is somewhat similar to what public sector employees in Wisconsin protested over. Big difference, they can strike and they can organize into labor unions.

This is the biggest issue. I don't care if they promised me a Lamborghini at retirement and Congressman Ryan now doesn't think I've earned it. I've kept up my part of the bargain now the government can keep up theirs.

Also, while we are comparing ourselves to the civilian world and civilian counterparts, let's not forget to add the costs on ours and our families lives while we are gone for 7-8 months a year, every year. If you make it to 20, then you have earned what was promised. If the government can't afford to keep that up, then change the rules from now on.

 

[smoke_screen]

BAH, BAS, special pays, tax advantages (even small as you mention), monetizing the medical benefit to roughly $1000/mo, etc, etc, its not that far from a six figure compensation all told. I saw a Chief's LES, twenty something years, dependent San Diego BAH, it was YTD ~$84k. There may have been some family separation pay sprinkled in there but no combat pay that year.

 

[robav8r]

Also, while we are comparing ourselves to the civilian world and civilian counterparts, let's not forget to add the costs on ours and our families lives while we are gone for 7-8 months a year, every year.

^ +1
Many folks that have injected themselves into this discussion (both on this board, and elsewhere) talk about it like they read it in a book or it's some abstract homework assignment. Unless you have done the time at sea/deployments/time away from home, over and over and over again, save the economics & accounting speeches for the classroom - I don't care what you have to say.

 

[Spekkio]

BAH, BAS, special pays, tax advantages (even small as you mention), monetizing the medical benefit to roughly $1000/mo, etc, etc, its not that far from a six figure compensation all told. I saw a Chief's LES, twenty something years, dependent San Diego BAH, it was YTD ~$84k. There may have been some family separation pay sprinkled in there but no combat pay that year.

Don't move the goalpost. $88k (factoring in the tax advantage from your above number) is not "six figure compensation". It's $12,000, or about 15%, short.

I have heard the "but he makes over $100k" argument pertaining to senior servicemembers. It's not true unless they live in a place with monster BAH, and BAH doesn't factor into retirement anyway.

 

[PhrogLoop]

...I would say you as an officer are a different catagory...the assumptions that civilian employers have with enlisted is what is hurting us...job fairs...

Believe me, I understand exactly what you are saying and I agree it is a shame. But the best jobs in this new economy are not found in job fairs and they are not found on Monster.com. They are found networking and that skill can be taught to any servicemember of any rank. My civilian mentor is an executive at a Fortune 500 (#125 ) company who was an Army E-5 before getting his Master's degree. He decided what industry he wanted to break into and immersed himself in it so he learned the language of that industry while making an academic name for himself. He made himself irresistible to multiple companies and watched them fight over their job offers to him. It can be done. There are lots of nonprofits who pair up Servicemembers (AD and Vets) with mentors to help make things like this happen at zero cost to the Vet. I'm not saying it is easy, but neither was our Service. I'm suggesting you can have your dream job at your dream compensation level if you want it. PM me if you'd like to hear more about the Mentorship service I went with.

 

[smoke_screen]

Don't move the goalpost. $88k (factoring in the tax advantage from your above number) is not "six figure compensation". It's $12,000, or about 15%, short.

I have heard the "but he makes over $100k" argument pertaining to senior servicemembers. It's not true unless they live in a place with monster BAH, and BAH doesn't factor into retirement anyway.

Well I said "nearly" and "compensation package" (versus pay) and was factoring in monetizing family medical benefits, exchange, blah, blah, etc. But honestly its immaterial to my initial point and I will gladly accept your submission that it is at best fair, at worst, a bit too low, and I will submit that it is probably more generous than necessary given the economy, modern job market, life expectancy, etc.

 

[smoke_screen]

^ +1
Many folks that have injected themselves into this discussion (both on this board, and elsewhere) talk about it like they read it in a book or it's some abstract homework assignment. Unless you have done the time at sea/deployments/time away from home, over and over and over again, save the economics & accounting speeches for the classroom - I don't care what you have to say.

While I did inject myself, I have actually endured it, appreciate those who do, did, and are. I am curious, would you say that the current compensation package is not generous enough, and if so, did you re-up at any point, and if so, was it based purely on patriotism, and if so, what is the beef with this conversation? Not at all throwing stones - curious about the indignation, "dont care what you have to say" etc.

I have nothing but sincere admiration and respect for you! I do however think it is counterproductive to avoid these conversations because of their emotive nature.