{"id":40234,"date":"2014-03-09T09:08:55","date_gmt":"2014-03-09T14:08:55","guid":{"rendered":"http:\/\/valorguardians.com\/blog\/?p=40234"},"modified":"2014-03-09T10:09:15","modified_gmt":"2014-03-09T15:09:15","slug":"pentagons-retirement-proposal","status":"publish","type":"post","link":"https:\/\/www.azuse.cloud\/?p=40234","title":{"rendered":"Pentagon’s retirement proposal"},"content":{"rendered":"

The Military Times<\/a> got a hold of DoD’s new proposal to Congress for altering the military retirement system for troops who make a career out of the uniformed services. It’s pretty difficult to understand, well, more difficult than the current “50% of the average top three years of earnings” system, but a lot of it revolves around the Thrift Savings Plan. So, let me tell you now how I’m a proponent of the TSP.<\/p>\n

I started my TSP 14 years ago, and on the day that George W. Bush was reelected I had $35,000 in that account by maxing out the contributions in those lean-contribution days. I took a $50,000 loan from the account in 2009 to help buy my house in 2009 and when I retired last month, my account balance was hundreds of thousands of dollars. But, I’m using that as a life insurance policy for my family, not as part of my actual retirement income.<\/p>\n

Like I said, I maxed out the contributions for 14 years and adjusted my lifestyle accordingly, because I hate paying taxes. The reason that the TSP works so well is that the costs in the plan are lower than almost any investment company out there. I used to be in the business, so I kinda know about that stuff.<\/p>\n

So, my point is that you should be contributing to the TSP, even though the Secretary of Defense, Chuck Hagel is adamant that he does not expect to change the plan for currently-serving troops. We all know how quickly that can change since the DoD is looking for ways to keep their generals and civilians fat and happy and still cut spending – the troops, then, will bear the brunt of the cuts. The TSP is your own insurance policy against those personnel-cut-happy bureaucrats.<\/p>\n

The new proposal by DoD seems to be a mix of a reduced defined benefit (pension) plan and the TSP, if what the Military Times reports is true. The current multiplier for figuring pensions is 2.5% (50% of the average of your top three years’ earnings for 20-year retiree) and they want to reduce that to 2.0% (40% at 20 years), with the TSP (which you can’t touch without being penalized by the IRS until you turn 59 1\/2) making up the difference.<\/p>\n

The Pentagon submitted two plans to Congress for consideration which they say won’t affect recruiting or retention. I don’t know how they can pretend to know that, but The Military Times explains the difference between the two plans;<\/p>\n

An important difference between the two options involves the \u201ctransition pay.\u201d Under the \u201cpartial benefit\u201d plan that reduces retirement pay during the \u201cworking age\u201d years and increases it at age 62, DoD would offer a generous lump-sum transition pay that mounts to about 2 1\/2 or three years of basic pay. Under the other option that more closely resembles today\u2019s system, transition pay would probably be equal to one-half or three-quarters of one year\u2019s basic pay.<\/p><\/blockquote>\n

In the Stars & Stripes<\/a>, they quote a Pentagon spokesman who is adamant to deflect blame from the Pentagon for this proposal;<\/p>\n

The Pentagon prepared the report, \u201cConcepts for Modernizing Military Retirement,\u201d for the Congressionally mandated Commission on Military Compensation and Retirement Modernization, which is conducting a broad study of how the department pays its current troops and retirees. The commission\u2019s report is due in February 2015.<\/p>\n

\u201cThis is not a proposal, it\u2019s not a plan, and it\u2019s not a recommendation,\u201d Pentagon spokesman Lt. Cmdr. Nate Christensen said. \u201cIt\u2019s something we\u2019re required to submit to the commission for their use as they work toward an ultimate recommendation to Congress and the President.\u201d<\/p><\/blockquote>\n

No matter who proposed it, it’s sure to throw some doubt into the equation when the troops are making the decision whether they want to make to make a career out of military service or not. Any change to the current plan will eventually hurt retention and hinder readiness.<\/p>\n

But the one thing that ease doubt is for you to begin contributing to the TSP now, no matter what your career status is. And if the Pentagon wants to make the TSP option more attractive to career personnel, they should begin matching contributions, because the last I heard, they weren’t.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Military Times got a hold of DoD’s new proposal to Congress for altering the military … Pentagon’s retirement proposal<\/span>Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[84],"tags":[],"class_list":["post-40234","post","type-post","status-publish","format-standard","hentry","category-military-issues"],"_links":{"self":[{"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=\/wp\/v2\/posts\/40234","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=40234"}],"version-history":[{"count":0,"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=\/wp\/v2\/posts\/40234\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=40234"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=40234"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.azuse.cloud\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=40234"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}