Military retirement under attack

[matmacwc]

I just saw a GS-13 retire with something like 26 years of service. His GS retirement is 2700 a month. His medical if he wants it, 700 a month. Not much to cut.

[ThreeHoler]

Here is the site to run your own numbers. Calculating my own tentative retirement plan, gross cumulative retirement income before taxes at age 62 is $1.71M (conservative). Under the new plan with all the same parameters it becomes $1.53M. This comes to a loss of a little over 10% of my planned income during my post military service years, not 1% as you stated.

ETA: numbers are between 10-11% for anyone who retires close to 20 yrs both on the E and the O side. They go down to 5-6% for folks who retire around the 30 year mark. This is mainly because the closer you are to 62 when you retire, the less money you will lose.

Don't use that site. They haven't updated it since 2010.

This is a much better calculator (it also shows you how bad of a deal REDUX is): http://www.cna.org/centers/resource-analysis/retirement-calculator

Based on my own calculator, an O-5 retiring at 20 years of service in 2016 would earn approximately $3,289,791 before taxes between retirement and death at 79. Under the new plan, the same O-5 would earn $3,161,876 for a total reduction in retirement pay of $127,915 or 3.9%. These numbers are based on a 1% AD pay raise per year from 2013 to 2016, CPI-U of 3.0% per year until death at 79 (historical CPI-U for the last 100 years is 2.97%), they also are pretty close to the MOAA numbers.

[clouseau]

This is just low hanging fruit and can you imagine the outcry by the populace if a similar idea was introduced in regards to either welfare or social security ?

[nsplayr]

Perhaps those at the GS level schould endure the same cuts to their retirement as well .

You're kidding right?

In addition to lengthy pay freezes and furloughs, all of which we've avoided on active duty, federal civilians have already been asked to contribute significantly more to their retirement in recent years and this new budget deal has piled on to that effort.

Most current government employees pay 0.8% of their annual salary as the cost of the FERS annuity. Those who were hired after Dec 31, 2012 now contribute 3.1% for the exact same benefit, i.e. congrats new guy, you just took an annual pay cut of 2.3% for the exact same benefit each and every year of your employment.

Now, not 1 year later, any employees hired recently (less than 5 years of service) will have to pay an additional 1.3% each and every working year for the exact same retirement. End result: dude hired 5 years ago is contributing 0.8%, dude hired 4.9 years ago is contributing 4.4%. On, say a $95K salary, that's an immediate $3,420 difference per year and those guys are getting the same benefit on the back end.

So while military retirees are getting 1% less per year until age 62 (about 24 years at the most if an 18 year old enlistee retired at 20 years of service), recently hired federal civilians are paying 3.6% more every year they work, which on the civilian side is usually at least that long and possibly longer i.e. 30+ working career before reaching the minimum retirement age which is at most age 57.

I'm not a fan whatsoever of either the military or federal civilians picking up the slack in the national budget, but the civilians are getting a much worse deal than the military retirees. And the negative effects hit immediately rather than the reductions in benefits being deferred until retirement.

Edited December 14, 2013 by nsplayr

[clouseau]

You're kidding right?

In addition to lengthy pay freezes and furloughs, all of which we've avoided on active duty, federal civilians have already been asked to contribute significantly more to their retirement in recent years and this new budget deal has piled on to that effort.

Most current government employees pay 0.8% of their annual salary as the cost of the FERS annuity. Those who were hired after Dec 31, 2012 now contribute 3.1% for the exact same benefit, i.e. congrats new guy, you just took an annual pay cut of 2.3% for the exact same benefit each and every year of your employment.

Now, not 1 year later, any employees hired recently (less than 5 years of service) will have to pay an additional 1.3% each and every working year for the exact same retirement. End result: dude hired 5 years ago is contributing 0.8%, dude hired 4.9 years ago is contributing 4.4%. On, say a $95K salary, that's an immediate $3,420 difference per year and those guys are getting the same benefit on the back end.

So while military retirees are getting 1% less per year until age 62 (about 24 years at the most if an 18 year old enlistee retired at 20 years of service), recently hired federal civilians are paying 3.6% more every year they work, which on the civilian side is usually at least that long and possibly longer i.e. 30+ working career before reaching the minimum retirement age which is at most age 57.

I'm not a fan whatsoever of either the military or federal civilians picking up the slack in the national budget, but the civilians are getting a much worse deal than the military retirees. And the negative effects hit immediately rather than the reductions in benefits being deferred until retirement.

Look I,m not a fan of this crap sandwich either but at some point something had to give.

Like I said earlier this is all low hanging fruit except some will take the hit for it and the better idea which would have taken some stones would have been going after waste with a vengeance and cuts across the board and that includes welfare and social security as well .

What part of this country is going broke don't people get ?

Interesting article on Mil.retirement numbers.

http://www.central-view.com/past.asp?number=1543

Edited December 14, 2013 by clouseau

[TarHeelPilot]

How long have civilians had TSP matching?

[clouseau]

How long have civilians had TSP matching?

Since the mid 80"s I believe.

Edited December 14, 2013 by clouseau

[Warrior]

You're kidding right?

 

In addition to lengthy pay freezes and furloughs, all of which we've avoided on active duty, federal civilians have already been asked to contribute significantly more to their retirement in recent years and this new budget deal has piled on to that effort.

 

Most current government employees pay 0.8% of their annual salary as the cost of the FERS annuity.  Those who were hired after Dec 31, 2012 now contribute 3.1% for the exact same benefit, i.e. congrats new guy, you just took an annual pay cut of 2.3% for the exact same benefit each and every year of your employment.

 

Now, not 1 year later, any employees hired recently (less than 5 years of service) will have to pay an additional 1.3% each and every working year for the exact same retirement.  End result: dude hired 5 years ago is contributing 0.8%, dude hired 4.9 years ago is contributing 4.4%.  On, say a $95K salary, that's an immediate $3,420 difference per year and those guys are getting the same benefit on the back end.

 

So while military retirees are getting 1% less per year until age 62 (about 24 years at the most if an 18 year old enlistee retired at 20 years of service), recently hired federal civilians are paying 3.6% more every year they work, which on the civilian side is usually at least that long and possibly longer i.e. 30+ working career before reaching the minimum retirement age which is at most age 57.

 

I'm not a fan whatsoever of either the military or federal civilians picking up the slack in the national budget, but the civilians are getting a much worse deal than the military retirees.  And the negative effects hit immediately rather than the reductions in benefits being deferred until retirement.

Accounting like this is a huge part of the problem. If I understand this scenario correctly, dude who was hired 5 years ago contributes .8 percent. If he's still contributing .8 percent then no one took a pay cut, even if the new hire squadron secretary is contributing 4.4 percent. It's a different job for a different person with a different set of benefits which were known before they signed up.

I'm not arguing this is all rainbows and unicorns but it doesn't sound like the sky is falling either.

Or am I way off track?

[nsplayr]

Accounting like this is a huge part of the problem. If I understand this scenario correctly, dude who was hired 5 years ago contributes .8 percent. If he's still contributing .8 percent then no one took a pay cut, even if the new hire squadron secretary is contributing 4.4 percent. It's a different job for a different person with a different set of benefits which were known before they signed up.

I'm not arguing this is all rainbows and unicorns but it doesn't sound like the sky is falling either.

Or am I way off track?

It's not that the person doesn't know ahead of time if they are a new hire, although it seems like some folks were not grandfathered into what they signed up for and we'll see how it's implemented on the civilian side.

Here's how I think most employees would see it:

Bill is a GS-13 program manager working for Agency X. His annual salary is $95K. He has worked at Agency X for 5 years and contributes 0.8% of that $95K into FERS every year, or $760 per year. If Bill works for the Feds for the next $25 years, he will have paid in $19,000. For argument's sake no promotions, step increases, etc. for simplicity's sake.

Fred is a GS-13 program manager who shares an office with Bill at Agency X. His annual salary is $95K. He was hired on 6 Jan 2014 (hypothetically falling under the new rules if the budget deal passes). He will contribute 4.4% of that $95K into FERS every year, which is $4,180 per year. If Fred stays on with the Feds for 25 years, he will have contributed $104,500 for the exact same FERS annuity that Bill receives. Same assumptions as above.

That is real money and OBTW unlike the changes for military retirements, these changes take effect day 1 in each employees paycheck. Bill's before-tax but after-FERS take home is $7,853 per month. Fred's is $7,568.

Fred, congrats on your new job and all, I'm sure you're gonna work out great, but you get to do the exact same work as your office mate Bill and you will make $285 less per month every month for the entirety of your career.

So as an O-3 who most likely makes IVO what Fred and Bill make, would you want to do the same job you're doing now for $285 less per month?

It's not that the sky is falling, but when you want to raise revenues from a small group of people (Feds, military retirees, or even both groups combined), the pain for each individual person is significant. Anyone with half a brain making $95K annually can figure out how to make it work for $285 per month less, just like any mil retiree with half a brain can make it work with less growth in their expected COLA increases. Neither of those changes are good policy or things I support, don't get me wrong.

My entire argument in the first place was just to demonstrate to clouseau that the Fed civilians were indeed getting the shaft right along side mil retirees, and I'd argue more so since the cuts are felt immediately and affect every federal civilian regardless of whether they ever end up drawing that FERS annuity at retirement. To the ~83% of military members who will never retire, the cuts being proposed will not affect them whatsoever and even those who plan on retiring, you likely have years to adjust your plans rather than seeing $285 extra dollars taken out of your Feb 1 2014 O-3 paycheck.

Edited December 14, 2013 by nsplayr

[ThreeHoler]

How long have civilians had TSP matching?

DOD has had the option of TSP matching for a long time. The Army tried it and determined it was too expensive compared to the current retirement program.

[clouseau]

This was just sent to my inbox and I had to read it twice.

Don't know if it qualifies to be in the read file but it speaks volumes .

http://mickeyinthemiddle.blogspot.com/2013/12/an-open-letter-to-congressman-ryan-and.html?m=1

[hindsight2020]

It's not that the person doesn't know ahead of time if they are a new hire, although it seems like some folks were not grandfathered into what they signed up for and we'll see how it's implemented on the civilian side.

Here's how I think most employees would see it:

Bill is a GS-13 program manager working for Agency X. His annual salary is $95K. He has worked at Agency X for 5 years and contributes 0.8% of that $95K into FERS every year, or $760 per year. If Bill works for the Feds for the next $25 years, he will have paid in $19,000. For argument's sake no promotions, step increases, etc. for simplicity's sake.

Fred is a GS-13 program manager who shares an office with Bill at Agency X. His annual salary is $95K. He was hired on 6 Jan 2014 (hypothetically falling under the new rules if the budget deal passes). He will contribute 4.4% of that $95K into FERS every year, which is $4,180 per year. If Fred stays on with the Feds for 25 years, he will have contributed $104,500 for the exact same FERS annuity that Bill receives. Same assumptions as above.

That is real money and OBTW unlike the changes for military retirements, these changes take effect day 1 in each employees paycheck. Bill's before-tax but after-FERS take home is $7,853 per month. Fred's is $7,568.

Fred, congrats on your new job and all, I'm sure you're gonna work out great, but you get to do the exact same work as your office mate Bill and you will make $285 less per month every month for the entirety of your career.

So as an O-3 who most likely makes IVO what Fred and Bill make, would you want to do the same job you're doing now for $285 less per month?

It's not that the sky is falling, but when you want to raise revenues from a small group of people (Feds, military retirees, or even both groups combined), the pain for each individual person is significant. Anyone with half a brain making $95K annually can figure out how to make it work for $285 per month less, just like any mil retiree with half a brain can make it work with less growth in their expected COLA increases. Neither of those changes are good policy or things I support, don't get me wrong.

My entire argument in the first place was just to demonstrate to clouseau that the Fed civilians were indeed getting the shaft right along side mil retirees, and I'd argue more so since the cuts are felt immediately and affect every federal civilian regardless of whether they ever end up drawing that FERS annuity at retirement. To the ~83% of military members who will never retire, the cuts being proposed will not affect them whatsoever and even those who plan on retiring, you likely have years to adjust your plans rather than seeing $285 extra dollars taken out of your Feb 1 2014 O-3 paycheck.

Man that is a fucking shaft for the new hire FERS employees. I can only imagine what a newly pinned on O-3 would act like if he was told his deductions are going up to the tune of 4.4% for the same benefit, effective right meow. It would make a T-37 sound like a soft whisper in the wind.

[Learjetter]

It's been said before but bears repeating: Congress should cut UNEARNED entitlements, of every kind, before cutting EARNED entitlements.

Anything else is breaking faith.

[herkbum]

It's been said before but bears repeating: Congress should cut UNEARNED entitlements, of every kind, before cutting EARNED entitlements.

Anything else is breaking faith.

Amen. Letters to Congress and President sent yesterday.

[HeloDude]

It's been said before but bears repeating: Congress should cut UNEARNED entitlements, of every kind, before cutting EARNED entitlements.

Anything else is breaking faith.

Careful, you'll offend the liberals.

[Skitzo]

unearned in the sense that the evil profit makers kept them at an economic disadvantage from earning them?

This thing is close to circling the toilet.

Sent from my iPhone using Tapatalk

[Fuzz]

unearned in the sense that the evil profit makers kept them at an economic disadvantage from earning them?

This thing is close to circling the toilet.

Sent from my iPhone using Tapatalk

As long as she gets any damn money, they have no right to touch a single military member's retirement.

http://www.youtube.com/watch?v=fPZBPVnrGfA

Edited December 16, 2013 by Fuzz

[HU&W]

unearned in the sense that the evil profit makers kept them at an economic disadvantage from earning them?

This thing is close to circling the toilet.

Sent from my iPhone using Tapatalk

The "evil profit makers" don't post guards to stop the economically disadvantaged from entering the military recruiter's office.

[pcola]

As long as she gets any damn money, they have no right to touch a single military member's retirement.

http://www.youtube.com/watch?v=fPZBPVnrGfA

"I mean…who would want to work in America? This is what the taxpayers are paying for."

Disgusting human being.

[zach braff]

"I mean…who would want to work in America? This is what the taxpayers are paying for."

Disgusting human being.

So actually, she's not the disgusting human being I don't think - she's just telling us about the disgusting human beings out there. This is from a few years ago - as I recall she's actually an artist using satire to poke at the ridiculous state of welfare, especially in California. Everything she says is true, but she's not the one doing it. She just used this (and her awesome video - "It's Free, Swipe Yo EBT" - google it) to call attention to it.

Although I don't have time to go back and look up the specific references - that's just what I remember. I think.

zb

edited for found the snopes here's some details on it - but yeah it was made in fun then took off... http://www.snopes.com/politics/satire/parasites.asp

Edited December 17, 2013 by zach braff

[joe1234]

No, she's still a disgusting human being. How dare you impugn our right to experience political outrage from Youtube videos, Facebook posts, and Twitter feeds! The integrity of the echo chamber must be maintained at all costs!

[Fuzz]

http://www.foxnews.com/politics/2013/12/17/senate-gop-fails-in-final-bid-to-restore-military-pension-cuts-to-budget-bill/

Well you can now thank the democrats for taking more money out of your wallet. To all the liberals out there congrats your congressmen and senators value illegal immigrants over your work and sacrifices.

[Learjetter]

Didn't Congress merely assess and pass the Pentagon's budget request (like they often do) to reduce retiree COLA, among other things?

http://security.blogs.cnn.com/2013/07/31/pay-benefits-troop-reduction-on-the-table-as-pentagon-wrestles-with-budget-cuts/

We might be pissed at congress for passing the damn thing, but isn't it what Hagel and the Joint Chiefs asked for?

[HeloDude]

http://www.foxnews.com/politics/2013/12/17/senate-gop-fails-in-final-bid-to-restore-military-pension-cuts-to-budget-bill/

Well you can now thank the democrats for taking more money out of your wallet. To all the liberals out there congrats your congressmen and senators value illegal immigrants over your work and sacrifices.

Lets be honest and fair here man...a strong majority of the Republicans and so-called 'conservatives' voted for this crap in the House, and several Republicans in the Senate voted to allow it to go forward as well.

For most of the GOP, I think it was purely political as they don't want the government shutdown to change the narrative away from the Obamacare disaster in prep for the Nov 2014 elections, and for the Dems, they wanted to get rid of some of the sequester and be able to show the country that they can govern. So in other words, politics won the day. But make no mistake about it, this was not a result of reduced spending. Check out how much the government will spend this next year and the compare to 2007 or 2008...and then if you really want to be sick, look at how much we spent in the early and mid 2000's compared to the late 90's.

To be quite honest, even if the GOP wins the House, Senate, and Presidency in 2016, I'm not so sure real fiscal discipline will return to Washington anytime soon.

[Fuzz]

Lets be honest and fair here man...a strong majority of the Republicans and so-called 'conservatives' voted for this crap in the House, and several Republicans in the Senate voted to allow it to go forward as well.

For most of the GOP, I think it was purely political as they don't want the government shutdown to change the narrative away from the Obamacare disaster in prep for the Nov 2014 elections, and for the Dems, they wanted to get rid of some of the sequester and be able to show the country that they can govern. So in other words, politics won the day. But make no mistake about it, this was not a result of reduced spending. Check out how much the government will spend this next year and the compare to 2007 or 2008...and then if you really want to be sick, look at how much we spent in the early and mid 2000's compared to the late 90's.

To be quite honest, even if the GOP wins the House, Senate, and Presidency in 2016, I'm not so sure real fiscal discipline will return to Washington anytime soon.

I get what you are saying and I hold the GOP as responsible for this crap sandwich, my point was the fact that Dems blocked the restoration of the COLA cuts ($6 billion over 10 years) in favor of allowing illegals to continue to get tax benefits ($4.2 billion a year).

Edited December 18, 2013 by Fuzz