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Are military pensions too 'generous'?

Discussion in 'Political Discussion' started by Patters, Aug 19, 2011.

  1. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Are military pensions too 'generous'? - Yahoo! News

    WASHINGTON (AP) — It sounds like a pretty good deal: Retire at age 38 after 20 years of work and get a monthly pension of half your salary for the rest of your life. All you have to do is join the military.

    As the nation tightens its budget belt, the century-old military retirement system has come under attack as unaffordable, unfair to some who serve and overly generous compared with civilian benefits.

    ...

    The report noted that military retirees start collecting pensions immediately upon leaving the service, rather than at age 65. That's a benefit without peer in the private sector, although there's a parallel in government. Some city police departments start retirement payments immediately, for instance.
  2. sdaniels7114

    sdaniels7114 Rookie

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    With the current anti-tax hysteria we may be forced to change 'em, but it won't be right. You don't ask a legal secretary or a dentist to go catch a couple of bullets to protect some civilians.
  3. DarrylS

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    This is sacred, albeit hallowed ground that cannot be discussed and will only lead to hysteria..

    There are two issues here, there are a lot of military who stay in the US and do essentially non combat activities.. and there are many who continually go back for more. There should be a way of weighing these factors..

    Those with the highest risk, get the highest reward.

    Also think that there needs to be a serious discussion of the "legacy costs" of any military intervention.. we have paid something like 5 trillion so far on these wars, and will be paying for a long time in the future.
    Last edited: Aug 19, 2011
  4. Harry Boy

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    They protect and die for the country, we have to have somebody kill the bastards that want to kill us, when Bush was the President all the war protesters were very concerned about them, they marched on Washinton and they openly wept at the Flag Draped Coffins coming home, I wonder where all those dear people went The Coffins are still coming in.

    I think they should get more money a free house and 72 virgins not in paradise but right here on earth.

    I also think that President Jug Ears should STOP THE WARS, he acts just like Bush, why is that?
  5. Wolfpack

    Wolfpack Banned

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    Funny comment: "All you have to do is join the military." Whoever wrote that obviously has no clue just how tough the act of spending 20 years in the military is. Easily equivalent to 40 years in any private sector job (and probably equivalent to 80 years in some government civilian job).
  6. PatsFanInEaglesLand

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    #37 Jersey

    For 20 years I worked for half the price as my civilian counterpart. So for the next 20 years my big bad 50% pension, will just catch up to the money that was given to the unionized civilian who did exactly what I did.

    The author and anyone who agrees with the *****, can **** off. If it is so easy and "generous" why don't you do it?
    Last edited: Aug 19, 2011
  7. PatsWSB47

    PatsWSB47 Rookie

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    #12 Jersey

    I don't know where you draw the line on benefits. On the one hand it seems excessive. On the other hand how do you get people to join the military if the pay and benefits parallel safer, less stressful jobs?
    Last edited: Aug 19, 2011
  8. Harry Boy

    Harry Boy Look Up, It's Amazing PatsFans.com Supporter

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    Liberals despise The Military, Billy Blue Dress openly admitted it.
  9. PatsFanInEaglesLand

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    #37 Jersey

    Please tell me how it is excessive?
  10. Real World

    Real World Moderator Staff Member

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    The question is a fair one, but the article linked is very poorly researched and written. There's little to no data in it, and it lacks perspective. First and foremost, what does 50% mean in real numbers? How many soldiers actually put in 20 or more years? Are soldiers eligible for SS for example? What type of hours do soldiers put in, versus their civilian counterparts in the outside world. It's easy to say "20 years and you retire", but if those 20 years mean 95% of the time is spent on the job for the most part, then it clearly wouldn't compare to a 9-5 job that most may work in here. I go home after work, and have weekends off. I'm not stuck in Korea or Afghanistan. I think there are a lot of different questions and angles that can be asked and presented. On the surface, it's an absolutely fair question. Maybe 20 years is too few years, maybe it's not. Without hard data and facts it's impossible to say.
  11. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    When you join the military you have stresses that people in the civilian world don't have. You are separated from your family for expended periods of time, your family is relocated frequently, of course you are in harm's way and any day could be your last.


    These soldiers and their families make far more sacrifices than any other group in this nation. Civilians have no idea.

    BTW the 50% is based on a salary that is far less than a comparable civilian gets. PRIEL 50% estimate is pretty accurate IMO.
  12. PatsWSB47

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    #12 Jersey

    Just saying on the surface to a civilian like me it's eye opening that you can retire at 38....especially since I'm on the north side of 50 and will have no choice but to work until 65. I'm not saying military careers don't warrant more than many civilian jobs do, but that much more? Perhaps. I made my choice though and I don't begrudge anyone that chooses a military career.
  13. Mrs.PatsFanInVa

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    #11 Jersey

    That's certainly not the way the Air Force sells it. I'm sure you have links to different data, however. Maybe you'd share them with us?

    Military pension would be hard to match

    It's fairly easy to calculate the dollar amount of a military pension after 20 years of active service, and we know a military pension is indexed for inflation so that it goes up over time as cost-of-living increases are granted.

    So let's take an example of an E-7 with 20 years of service. He entered service in 1984, so he's under the High-3 plan. His average basic pay over the past three years is $3,342 per month, and 50 percent of that average equals a retirement pension of $1,671 per month, or $20,052 per year.

    For an E-7 who has been in the military for 26 years, retirement is calculated under System 1 because his date of entry is prior to Sept. 8, 1980. This calculation is 2.5 percent of basic pay for each of his 26 years of service, or 65 percent of his annual basic pay at the time of retirement. At current pay rates, he makes $3,855 per month, or $46,260 per year, so the pension for that E-7 retiring after 26 years of service is $30,069 per year.

    Since most civilian workers today do not have pensions, they must save enough during their working years to give them a monthly income in retirement that will last their lifetime. Here's an idea of what you would have to do on your own to replace your military pension's value:

    • You would have to calculate how much you would need to retire at age 65 or earlier and manage your retirement account so that it increased to this amount while you are on active duty.

    • You would have to maintain your retirement kitty after you retire and invest it so that you have a monthly income.

    So, going back to the E-7 with 20 years of service, what is his military pension of $20,052 per year really worth? Most experts agree that to ensure your retirement funds will last a lifetime, you cannot take out more than 4 percent of your capital each year. If you wish to increase your retirement income each year to keep up with inflation, a 3 percent withdrawal from capital each year is a more reasonable figure. To replace an annual pension of $20,052 based on a 3 percent withdrawal rate, you'd need $668,400 ($20,052 divided by 0.03 equals $668,400).

    What is the possibility of accumulating $668,400 over 20 years on your present salary? Even if you assume you can take out 4 percent of your nest egg each year and not use up your money in your lifetime, you'd still need a nest egg of more than $500,000, without allowing for annual increases for inflation.

    A pension of $30,069 per year would probably require $1,000,230 in retirement savings.

    It is possible to purchase a retirement annuity for you and your spouse with your retirement nest egg. This would give you guaranteed income for life, but it would not increase each year to adjust for inflation. So in 36 years at 2 percent inflation, your money would be worth half as much and your lifestyle in retirement would decline.

    Bottom line: A military pension is a very valuable benefit. If you had to save the money to provide your own pension, you would need at least $668,400 to create a pension of $20,055 per year adjusted for inflation. And the continued payment of the monthly pension would depend on the performance of your investments.


    Military pension would be hard to match - Military Money, Air Force Money, air force pay, pay charts - Air Force Times

    Let me make it clear that I do not begrudge them this pension. In fact, I'm glad they get it and, if you ask me, anyone who's spent time in a war zone ought to have an upward adjustment based upon the time served in that war zone.

    However, I do take exception to people who try to minimize the monetary value of the amount received in an attempt to make it sound as though their pension benefits are not commensurate with a private sector pension.
  14. Wolfpack

    Wolfpack Banned

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    Let me do you a favor and teach you about how things in the military work since you've never served:

    Yes, they include all this stuff as a great selling point. They also talk about all the wonderful benefits of the G.I. Bill (or other education programs) as a great selling point. And you know why they are such great selling points? Because while they are great selling points, they know that only the teeny-ist tiny-ist fraction of people are actually going to follow through on the offer.

    The vast majority of servicemen never make it 20 years. And then the vast majority of servicemen who do make it 20 years stay in past that 20 year milestone (yes, Virginia, despite what this article wants you to believe, there are an awful lot of people in the military over the age of 38).

    So the actual number of people who join, serve exactly 20 years, then retire to their pension is so miniscule as to barely warrant discussion.
    You do get extra pay for hazardous duty in the military which I assume would funnel into your pension.
    Last edited: Aug 19, 2011
  15. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    A small fraction of enlisted men make it to E-7, you are talking about guys that are there for 30 years or so. Even the 30k/year is not much for the sacrifices involved. civil servants wiht similar tenure make far more.
  16. DarrylS

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    My predicted hysteria prediction was right, some cannot discuss the subject intelligently.. but what else is new??
  17. Real World

    Real World Moderator Staff Member

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    This is a little better because it at least begins to provide some more relative figures, analysis, and hard data. However, the writers logic is somewhat flawed.

    A civilian wouldn't have to save up $600k. They'd have to pay enough into an IRA or 401k where which they'd be able to draw a similar amount to that of the serviceman. With compounding interest and employee contributions to consider, a more indepth analysis would need to be done to figure out what the civilians hard dollar investment would need to be. Also, taken into consideration would be the fact that a civilian retirement would be an asset, and not a payment. It would continually acrue interest so long as there were hard funds in the account. Hard funds that would still exist once the drawers days are done, thus providing any beneficiaries with the remaining proceeds. Pensions don't provide the same benefit.


    Another point that has to be considered, is the job itself. Civilian job versus military career. I don't believe the military is a 9-5 job with weekends and hollidays off. So can we truly compare 20 years of working at a bank, with 20 years of working at a military installation, someplace in the world? That is a very important question point IMO. I'm going home when my days done, and I won't be back till Monday. If I want, I'll take a personal day next week, call in sick, or take a long lunch. Is that the same when you're in the military? The point is that there are much broader questions and angles than simple retirement numbers. I do think it's something worth analyizing. Maybe 20 years is too short a time to give someone full retirement. We're broke, and there are no sacred cows IMO.

    Edit:

    I Googled IRA retirement calculator and found this site. I punched in some data, and this is what I got. This isn't scientific or anything. I just wanted to get an idea of what the ballpark would be with respect to civilian retirement.

    http://www.chainvestment.com/resources/ira-retirement-calculator-11.html

    Your Age: 18

    Current Age Current IRA Balance: $0
    Enter 0 if none

    Expected Return Rate: 5%
    (8% is S&P Average)

    Expected Retirement Age Your Investment Plan: 60

    Contribute
    Per year until you reach 50: $2600 ($50 per week)

    Contribute Per year from 50 until retirement: $2600

    Estimated Years Retired: 20 (60 + 20 = 80 years old)
    (Average is 25)

    Your Results:

    At age 60 your account balance will be $369,183

    You'll then be able to withdraw $28,213 annually for 20 years.




    This calculator is for entertainment purposes only and should not be used to make important financial decisions. Please ask an expert at CHA to determine taxes taken out when making draws during retirement and how the rate of inflation will impact your returns.


    Edit #2:

    For ships and giggles I punched in the standard 8% average the site listed, as opposed to the 5% I punched in, and wow. Who knows how realistic 8% is. Maybe someone like Shmessy would know. What a difference though from the 5% ROI.

    At age 60 your account balance will be $854,316

    You'll then be able to withdraw $80,568 annually for 20 years.
    Last edited: Aug 19, 2011
  18. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    Not minimizing the service of the military vs. the private sector, but it is like comparing raisins and grapefruit. There is a lot of other stuff here, having worked around military folks most of my life, amazed at many of the benefits they get. Housing allowances, Tri Care, Exchange Privileges, Gas Stations, Golf Courses on some bases etc.

    Nothing begrudges any of what they receive, just that it is difficult to compare it intelligently. Used to have some volunteer navy corpsmen, who are the on field folks for the Marines, and remember one kid who was at Falujah and he talked how he worked for 48 hours straight. Great service, but in retrospect he loved every minute of it he described it as the greatest adrenalin rush he ever had. He would talk about how much he loved the military, he has a private room that he could lock and now that he was stateside he worked in medical clinics.

    I have kin who are going to be lifers, and they love it and everything that goes along with it, seldom complain. One is a Load Master on C-130's, who was in Kuwait and now in Arkansas. He loves every minute of the job and continually aspires to move up in rank.

    Some folks really like the service, but the question is are they all entitled to a pension plus medical care of life?? Personally think there should weigh the type of service.. taking care of wounded marines in Falujah is much different than pushing papers stateside.

    The reality of these wars is that it has cost us over 5.2 Trillion Dollars, and that does not include long term legacy costs.. some day there will be a discussion about the long term costs.
  19. Mrs.PatsFanInVa

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    #11 Jersey

    Thanks, RW. That was good information.

    I looked up military vacation and it seems everyone gets the same thing - no matter how long they've been in or what their rank is. Everyone gets 30 days of leave annually.

    I don't know how anyone can figure out about their days off and such. I do know that my son's friend who hangs around here all the time since he is stationed at Fort Belvoir seems to have an awful lot of free time. He seems to get regular days off - just like the rest of us civilians. Of course, he is not in a combat situation so I'm sure all bets are off when one is stationed in a war zone.

    Whether you're the lowest enlisted rank, or a 4-Star General (or Admiral), all military personnel get the same amount of vacation time. Military members get 30 days of paid leave per year, earned at the rate of 2.5 days per month.

    New England Patriots Forums - PatsFans.com Patriots Fan Messageboard

    I have a friend who was in the Army Band for 20+ years. She, too, seemed to have a great deal of time off. Plus a housing allowance and a travel allowance and a PX card which saved her tons of money.

    She is now retired on a disability pension (she's 50ish) and spends most of her time at her vacation home on the beach in The Yucatan. She still owns a paid-off condo here in Arlington, as well.
  20. Wolfpack

    Wolfpack Banned

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    I knew someone ignorant of military service would mention the 30 days thing, and sure enough you didn't disappoint! Yes, you get 30 days of leave annually, but they own your ass the other 335. In the civilian world, you get about 100 days off just from weekends alone. Plus another 10 or so holidays. Plus your couple weeks vacation.

    So to talk about those 30 days as if they were some huge boon not enjoyed in the civvy world only further demonstrates your ignorance.

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