Yep, this saves a TON of money over the years, but as @MDavidW100 says it will go up a LOT at 65 when you are forced to pay for Medicare Part B to keep TRICARE for Life. What you pay for a year of TRICARE is about what you pay per quarter for Medicare. Yep, happened to me this year. One of those things in the fine print that can whack you upside the head later.
@@joshuathomas8529 we pay $175/month just for my wife. I’ll have to pay about the same when I turn 65, versus ~$650 per year for TriCare Prime as a retiree, For us both.
I had an old high school friend contact me earlier this year trying to sell me on his company's financial products, and it very much fell into the "trying to save what you have" camp. It was an awkward moment when he was saying he aims for 5% on the high end, and I'm aiming for 10% on the low end with significantly more risk that he'd ever feel comfortable with (I told him jumping out of planes with machine guns will tweak your risk profile).
Oh oh oh! You have hit on a really important point about risk. Some civilian with a ROTH IRA worth say $2M is WAY less comfortable with market risk than a military retiree. For the civilian, that IRA is *everything* he has. If he loses it, he's toast. But for the military retiree getting a CPI adjusted pension, they can take on significantly more market risk without batting an eye.
@@the_bureaucrat That's what I was thinking. Unfortunately, all the retirement planning videos and websites out there assume that there is no income after retirement, so it's difficult to use their advice. Even Google isn't very helpful in figuring out how much should be in one's retirement account when one pops smoke if one has another $85k coming in yearly between retirement and VA disability. Surely other jobs have decent pensions too.
I’m pre-DOPMA so my retired pay is ancient history. However, the medical benefit is what’s really a life-saver. I’m from the generation that recruiters promised “free” healthcare for life but who believes a recruiter. Even with paying into a TRICARE plan you have the flexibility that your civilian counterparts don’t have. You’ll find many of your colleagues would love to quit their jobs but the loss of quality health insurance chains them down. TRICARE may not be perfect but what you and your family receive in costs and benefits gives you the career flexibility that you and your family EARNED.
I second this. When you first retire it may not seem as big a deal (especially if you are younger), but over time TRICARE saves you tens of thousands of dollars.
This is actually the hook that lured me back into the military. I did ROTC in the 90's for the college money and got off active duty as fast as I could...but then I was working at a plant where there were so many old dudes trapped working just for health insurance.
There is also a difference between active duty and reserve retirement. Reservist retirement is calculated under the point system. Unless a reservist has 20+ years of active service, eligibility does not start until age 60 (mobilizations over 90 days can partially reduce wait time).
When I joined in 87 I was told by my then LtCol uncle that you won't get rich in the military but you can live very comfortably. Retired in 2018 SCPO (E-8) with 28years under the high-3 50% plan, did not take the sucker offer of cash to switch to the redux plan. Went to work for 7 more years because I bought into the 47 is too young to fully retire and also having tunnel vision on reaching 100% success rate with the Monty Carlo calculators. The 7 additional years being able to invest almost all the pay took us from living comfortably to living a very cushy verging on luxurious life. Between the pension and VA we only touch taxable investments for items like vacations. If SS stays the same then at that time there won't even be a need to touch the taxable or Roth's.
In the early 90's I got the same warning, but by the time I was 20 years in, my dad (who thought I was an idiot for joining) was flabbergasted at how beneficial service had been (degrees, experiences, travel, and of course $$)
Good info. If you live within your means, you can live well with your retirement and SS, not to mention any other retirement income you may have. I thank God I stayed in and retired (2000).
More and more, I believe that living within your means is the most important piece. I've seen some people with really high incomes who were as broke as can be simply because they always needed to have the newest car and replacement furniture.
One interesting point is the number of retirees "sharing" their retired pay with an ex-spouse, or two. This scenario can easily change an O6 retired pay amount to an O3 or less amount if child support payments are included.
Most definitely, one of my jobs was traveling around explaining the retirement system and educational benefits. It went all the way up to the E5-E6 level and JO's that didn't have a clue on how the pay was computed with some not even knowing the system they fell under (High-1, High-3 or REDUX) High-1&3 both started at 50% for 20 while REDUX started at 40% for 20. Recruiters did not help with the lies they told.
@@kenm8162 I was an airman in 1986 but didn't retire. I did use my GI Bill. If I could do it over, I would of went to college and then went in as an officer. But it all worked out...
Military retirement is great if your 20 year military experience allowed you to build private sector marketable skills without a lot of physical wear and tear on your body. Electrician, air traffic controller, firefighter, HR Specialist, logistics manager, pilot, accountant, computer technician etc. On the other hand, a 20 year infantry type (Special Operations even more) has probably beat up their body and probably doesn’t have a lot of skills the private sector is looking for.
Did 28yrs as an Electronics tech then followed it with 7 years in the IT field for the state before saying enough. Loved the job but couldn't stand dealing with the people that did not know of to take accountability.
I'll be retiring at around 51 or 52. I'm lucky enough to be in a career that can get better pay on the outside than in the military. My plan right now - haven't talked to an advisor about this, or my wife for that matter - is to invest 100% of my pay and VA disability. The goal is to get it to grow to the point that the interest plus the pay equals my salary once I hit 65. I won't be adding any more to it, but depending on how much I need to take out, it will continue to grow.
@armymutt25A, one thing to think about is that your "interest plus the pay" doesn't necessarily have to equal your salary if your job is creating expenses. I'd suggest that the real goal is that "interest plus the pay" exceeds your expenses by the same amount as when you are working. You'd be surprised how much it costs to work.
@@the_bureaucrat True to some degree. If I go the direction I'm thinking, most of the non-reimbursable expenses will be from LLC registration fees. Everything else will be paid by the business, including travel to the work location. If I end up in the GS job, then yes, the expenses will be greater.
I'm at 22 years of service and intend to push through until 26 unless my family and body can still handle the lifestyle for another assignment or two. At that point, my retirement and investments will have me situated to be a gentleman of leisure, as you call it 😆
30 years Army Nurse Corps, I could have served 10 more years but took a GS position post retirement. I don't think I can handle 30 years of civilian nursing.
You have what most people will never have. Choices. Options. Freedom to decide what you want to do as a follow on career, like a small business or hobby farming selling eggs and produce at the local farmer's market on the weekends. That is the whole point of having wealth.
That's a good spot to be in. One nice thing about having that many years under your belt is that you can begin to document your medical issues without too much fear that it will "ruin your career". And depending on your rank, there are a couple Years of Service pay raises that are worth picking up.
@@the_bureaucratthere are 3 Class of born establish in the United States Constitution Laws: 1) born, establish in Amendment XIV Section 1, 2) natural born establish in Article II Section 1 Clause 5, 3) was born; Amendment XIV Section 1 is now “All naturalized or born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any citizen of life, liberty, or property, without due process of law; nor deny to any citizen within its jurisdiction the equal protection of the laws.” “No person shall” Clause in Section 3 so person got replaced with citizen in the original text of Amendment XIV Section 1 and naturalized got place on the left of the or since it deals with foreign born citizens;
@@the_bureaucratthere are 3 Class of born establish in the United States Constitution Laws: 1) born, establish in Amendment XIV Section 1, 2) natural born establish in Article II Section 1 Clause 5, 3) was born; Amendment XIV Section 1 is now “All naturalized or born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any citizen of life, liberty, or property, without due process of law; nor deny to any citizen within its jurisdiction the equal protection of the laws.” “No person shall” Clause in Section 3 so person got replaced with citizen in the original text of Amendment XIV Section 1 and naturalized got place on the left of the or since it deals with foreign born citizens; Article I.8.1 “provide for the common Defence and general Welfare of the United States;” applies to I at 100% for Life and My Family Members;
@@the_bureaucratas usual yt civil delete My post; there are 3 Class of born establish in the United States Constitution Laws: 1) born, establish in Amendment XIV Section 1, 2) natural born establish in Article II Section 1 Clause 5, 3) was born; Amendment XIV Section 1 is now “All naturalized or born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any citizen of life, liberty, or property, without due process of law; nor deny to any citizen within its jurisdiction the equal protection of the laws.” “No person shall” Clause in Section 3 so person got replaced with citizen in the original text of Amendment XIV Section 1 and naturalized got place on the left of the or since it deals with civil domestic birth or foreign born citizens; Article I.8.1 “provide for the common Defence and general Welfare of the United States;” applies to I at 100% for Life and My Family Members;
I just did my 20. I started out enlisted and finally decided to commission in 2021. I just jumped up to 2LT retirement pay and will soon make 1LT (the old system takes your top 3 years). I'm going to stick it out until I've at least been a Major for 3 years. Given that I make Captain next May, that means retiring right around 2030 or so. If I really wanted to, I could likely stick it out into my 50s. At this point, I view it as a supplement or replacement for social security. Given that I'm in the Guard, I won't see a penny until I'm 60. I'm really hoping that I'll have enough debt paid down that I'll be able to unofficially retire at that point and just get that monthly check until I reach the official social security retirement point.
Keep an eye on the Reserve Early Retirement System. Depending what status you did any deployments in, you might be able to retire with full pension long before age 60. ua-cam.com/video/t6y7t_yTfDE/v-deo.html
Have you ever looked at older entrants (i.e. enlisting or commissioning) over 40 and not being able to retire with pension or how to retire by extending past 60? Is there any hope for over 40 doing so?
I did a survey of all the retirement authorities a couple months ago (for a side project, not something I posted). And I'd have to look at the details, but I suspect that what really happens to them is that they can't "voluntarily" retire. The 20 year retirement is usually "voluntary" where the SM asks permission from the Service Secretary. But there are a bunch of other authorities including ones for age where the Service Secretary makes the decision to retire the SM. I made a note and I'll follow up on it.
In 2018, the Army changed their Military Retirement Pension Plan which was 20 yrs of services you get 50% of your base pay of the rank you retire at. Over 20 yrs of service you get the 2.5 multiplier. Now, all Soldier entering the Army after 2018 falls under the new Blended Retirement Plan which is 20 yrs of services you get 45% of your base pay and whatever you contribute to your Thrift Saving Plan (TSP), in other words the military's 401k.
If you joined on or after * Sep 1980, but before 1 Jan 2018, you get the 50% of the average of the 3 highest years of base pay, not base pay of the rank you retire at. If you joined on or after 1 Jan 2018, you get 40% of your base pay for 20 years of service under BRS and 2.0% multiplier for years over 20. The BRS COLA is calculated differently too. It's 1 percentage point lower than the full CPI increase applied to other retired pay programs.
I was medically retired at just under 16 years. The army gave me 40% and the VA gave me 100% P&T as I lost the use of my foot, lost my ankle, and collarbone was replaced, and several combat tours resulting in PTSD. They said I will never get the army pension because I didn't get to 20 years. Is that true? I mean why do I get statements from dfas showing me receiving that 40% but never getting it? And when I called when I first got out they told me I don't get it at all. Huh? Confused.
Shoot me a note at chuck.weko@gmail.com. The Medical retiree pay has two different multipliers it uses (one based on disability rating and the other on years of service). Retirees get to "pick" which one they use.
not bad at all. say a E6 lives about 30yrs in retirement with a million asset that's 33k a year or 2750 a month. throw like 3k SSA on that, 5750 a month or 69k a year with no tax.
It's not a bad deal at all. Over my time in service I met three E6s who retired (or were about to retire). None of them lived like kings, but they certainly were in a much better position than they would have been in the civilian sector. In fact, one attributed his lack of advancement to his wife's cancer and his unwillingness to take assignments that left her alone. He was adamant that the health care was worth it.
If you can make it to 20. Only about 10% make it across the finish line. (Enlisted) I did it... and retired at 45. I still work, but most of that goes straight into investments. I don't work because I have to. I buy individual stocks here and there, but mostly I have a number of SP 500 funds that pay out dividens monthly/quarterly for my fun money and others in an IRA for my kids.
The folks who really get screwed are the ones who are at ~15 years and get a medical disability retirement. At first it looks like a good deal, then all the fine print kicks in.
@the_bureaucrat yep. I saw that a number of times. They'll reasses your disability and cut your medical payout. Pretty much anyone doing more than 4 but less than 20 are getting the least amount of pay and benefits for their service. Before anyone cries about selfishness instead of service. Just realize this. #1 that service has an unlimited clause. You are expected to do your job even if it results in your death. #2. There is no overtime or on call pay. You are expected to work until you are releaved. That means a regular week tends to be 60 hours. A long week is well over 100 hours. You are on call 24/7/365 for four years at a go, which can be extended at any time due to the needs of the service.
Understanding the value of a military retirement... Think of your monthly payment as an anuity. Now consider that $1,000,000.00 invested at 5% rate of return would net you approximately $48,000.00 per year. This gives you a realistic way to approximate the "value". Be certain to account for tax advantage as well. Add any disability , social security, or special pays as well. And yes, don't forget to count the cost of medical insurance as part of that "value". Best of luck, Phil
I always used current pension $ multiplied times life expectancy (76 for average) to figure current value of my pension. Trying to find a calculator that figures out the equivalent annuity value is problematic. I don't think one exists that takes in the annual COLA.
I'm not sure how the US runs the military pension plan, but the Canadian military force members pay into the pension plan. I believe the government matches these contributions and the plan is supposed to be administered by a 3rd party fund manager. On average, retirees draw only 5 years of pension before taking a dirt nap.
Sounds like the Canadian military pension is like our public service pension system, like teachers, firefighters, or police. US military, we don’t pay into our pension plan. We have another option to pay into our own retirement plan so by the time you hit military retirement, you can have 3 sources of retirement income (military pension, disability, and personnel retirement savings). Once social security hits (67yrs old), that totals to 4 retirement streams
@CasChet1 is right, US military Service Members don't pay into their pension from their own pockets. The services pay something called a "retired pay accrual" out of appropriations into a pension fund. I always thought of it as a bit of a shell game (tax dollars shifted between accounts), but the main effect is that the services worry about the cost of funding the pension without dragging the SMs into it.
I retired from the CAF in 2012. I was a Spec 1 SGT. Pension take home is $1900/month. Been collecting it for 12 years now and opted for the medical/dental coverage after release. Went back to school and got a $220K/yr job. I've been investing my pension for quite some time and I'm well on my way to a comfortable retirement with a second pension from the company I work for. During my exit interview, the Squadron Chief says to me "keep at it, you'll be in my chair in no time". I just looked up the pay scales for a SCWO. I earn more than twice that right now without the responsibilities of the SCWO! One of the reasons I got out was the 40% pay cut I felt I was taking the moment I was eligible for my pension.
@@CasChet1 The way the Canadian one works is that once CPP - what you call OAS - kicks in, they reduce the pension by that amount, so we never really get the benefits of CPP although we pay into it at the maximum rate. What really sucks is that our pension may be "split," with a spouse for income tax purposes, but CPP can't. The effect is that our post tax income level actually drops when OAS locks in.
For those saying the healthcare is worth more than the pension.. umm no and heres the math... I'd say TFL is worth $350 a month (calcs are in another comment) Prior to 65, and assuming you don't work, it's worth an ObamaCare premium + any additional copays. I assume age 55, 50k a year income and you hit the out of pocket max/catastrophic cap every year. An obamacare gold plan is $410 a month with a max of 5500.. compared to Tricare selects catastrophic cap of about 4500... a 1000 a year difference. ObamaCares premiums don't count towards the max but tricare selects do, effectively making tricare select premiums 0 for comparison (since you already paid them in the cap/max comparison)... so military retiree healthcare at 55 is worth the obamacare premium plus 1k a year.... about $5900 a year... I can safely say that any military retirees pension is more that $5900 a year... or about $500 a month. Also if your income was say $25k a year the obamacare cost would be even lower than what I present here... $6 a month premium with a $1950 out of pocket max.... in that case you might be better off with obamacare especially if you didn't live in a tricare prime area. Therefore the healthcare benefit might not be worth much at all... if you retired as an E5, chose not to work and embraced minimalism (or took a vow of poverty).
@the_bureaucrat there are lots of variables.. I assumed single but family coverage may be different (although obamacare subsidies might be higher too). Also if you were high income there would be no obamacare subsidy so Tricare would be worth more to you. Obamacare also can cost more if you smoke making tricare more valuable by comparison. However in many cases, the tricare retiree benefit may be worth less than many think as I presented.
Non-Vet here: CalPers Retiree... Just looking at the Value of a Pension, being very Conservative on Valuation... Take Yearly Net Pay & divide by .04... Just my Civil Service Pension has a Rough Value of around a Cool Million... Social Security adds another $400k... Definitely get a Financial Advisor... But find one who understands how to Value Pensions. The Military Healthcare Benefits... Are much better than the Healthcare I can afford.
That point about finding a financial advisor who understands how to value pensions is key. At one point I worked with an advisory office which simply didn't believe that the Miltiary pension (retired pay) existed. We didn't meet after that.
It would have been appropriate to invest 30 seconds explaining that military retirees traded their youth for the pension. I gave 37.5 years of my youth so other Americans can continue to be completely ignorant about what the military retiree does/did for their pension. I deeply believe it was a fair trade. The current blended retirement system is a clear indicator of how the American voter wants to erode this moral contract with the very people who earn & maintain YOUR freedoms.
@dang3343, I think you are on to an entirely different point that bears consideration in its own right. If you approach BRS from the angle of "What does this mean?", I think its more a case of Congress thinking they are helping while creating bigger problems.
The value of the retirement as part of your net worth is useless. You could die the day after you retire from active duty or 50-years after that date. With the exception of the SBP you can’t pass on your retirement to your spouse or child like you would with the rest of your net worth. Also you can’t take a loan against this asset like you can with any other asset you calculate as part of your net worth. The real value of your retirement is reducing the income requirement you will need when you retire for the final time.
WOW! I’ve never thought of it that way. The pension; Can’t pass it on, can’t take loan against it. Then again, I’ve always thought of the pension as a cherry on top of a well diversified portfolio of stocks and real estate. End goal is to out live the pension 😅
Is the pension even an asset to begin with? Isn't it just regular monthly payments, rather than a nest egg of money from which you are paid interest from?
@resterAnonyme - This is a brilliant point...I gotta think about it a bit. My thought was always "in order to self fund a monthly income of X, I would need an asset of Y value." Therefore the pension is "like an asset". Lemme think a bit.
@@the_bureaucratAnother thing to consider, SBP is an insurance product. When the member passes on the retirement completely goes away leaving no retirement asset. It’s the proceeds of the insurance the member paid into that is the actual asset and is what is paid to the spouse or child upon the members death.
@@the_bureaucrat Since it is backed by the full faith and credit of the US government, it can be considered the equivalent value in Treasury Bills. You could give it some sort of discount based on the fact that it dies with you, but you'll be dead, so do you care? If you need to fund dependents after you die or want to leave someone something, you can invest for that purpose or buy some form of life insurance product.
Medicare and Tricare for Life is fantastic. Best benefit of all. The pensions can be very lucrative, but this analysis is way too simplistic. Kind of useless.
I did everything right despite being a fat lazy slug...I knew what I wanted to do as far as a billet. I went to a junior college first and was awarded a STEM degree . I entered the Air Force reserves in 1979 and went on active duty in 1982. Retired in 2003 under the old world war 2 retirement system, 50% base pay at 20 and 2.5% added for every additional year. I was awarded 100% VA disabilty in 2016 . I draw soc sec. My 2 sons have careers and have left. My wife retires now with her pensions and Soc Sec. We have a beautiful home. Our net worth is 1.5 m. I am typical.
I thought the same thing. That report showed 4 E-4's retiring in 2022 with a Regular Retirement. 3 at exactly 20 years and 1 at 25 years. There's probably more to the story with them. They had 126 E5.
I mean the main benefit for all US milltary veterns ais simply base access which if you have a base local to you which as vetern is pretty likely you can go shop aat the comcary and exchange with no federal tax and great quality products at well normal prices and they tend to lie about MSRP alot buit still no tax... Also you have access to the base pharmacy that normally has cheap and mostly free medicine for veterns though the milltray can't make up it's mind to keep ot or not... Also you ghave all those vetern discounts at stores... while not very many these days they still exsist... And if you don't go to the a VA hospital(Which I have no idea why anyone would) you can still get free medical gear if you need it... a collage scolorship also tons of other little things... But anything more and you need to earn it... Also unless you reteer after 20 years or are an mid rank offcer then your axctaully pension won't matter at much just being a nice monthly cash bonus... Which I know this as both my grand parpanters are veterns by Grandma after a sghort career to be a full time mom as this was before the US milltary figured out how wemon worked... Something that it discovered only in the past few years... And my grandpa reteered after 20 years and both served in civil service my grandpa leaving that when the contractors took over. So yeah my advice if you actually wnat more then base access after your service serve more then 20 years in the milltary and rank up to the highest rank you can.... My grandpa regarts not making the final push to master chief...
@@the_bureaucrat Actually the use of the commissary is a great value. We shop at the commissary about once every few months, stocking up on meats and canned goods, the savings are significant.
Military is another government job. About 20% of workers are Fed, State and Local government workers. The average government worker makes more in total compensation than the average working taxpayer. And these government workers are typically less skilled, especially in the security sector. Police, Fire and Military are the only few jobs where you don’t have to have the required skills before being hired. Teacher, Social Worker, they want to see a 4 year degree and often Graduate degree to hired, plus work experience.
Well Police, Fire, and Military require you to be trained and pass fitness tests. Not everyone with degrees would be able to pass those tests, as they are not easy.
I am now dumber for watching this. There is nothing a financial advisor will tell you that you can't learn on your own. Conventional wisdom will yield conventional results. 80/20 portfolio with a 4% draw down rate, yada, yada, yada. That's not how wealthy people get wealthy. Military retirement is awesome. Let's hope our economy doesn't collapse. Be a prepper if you want to survive the next 20 years. That is all.
A discussion of this type without addressing survivor benefits is a waste of time. Also, the life expectancy of someone at age say 45 (average military retirement age) is well above 80 years old.. Interesting subject but useless information and presentation.
I know a 95 year old that was an air force electrician. He's been retired for 50 years. Living the dream.
He retired at 45?
Sounds about right.
That's a late retirement, 20 years from 18 is 38. Meaning could've gone 27 years @@cryora
You get more pay the more years you put in - both in rank and in percentage of that pay.
The biggest value is the health insurance.
It will go up 6x when you go on Medicare/TriCare for Life.
@MDavidW100 how so? I would love some details from someone over 65.
Yep, this saves a TON of money over the years, but as @MDavidW100 says it will go up a LOT at 65 when you are forced to pay for Medicare Part B to keep TRICARE for Life. What you pay for a year of TRICARE is about what you pay per quarter for Medicare. Yep, happened to me this year. One of those things in the fine print that can whack you upside the head later.
Just paid my $360 yesterday😊
@@joshuathomas8529 we pay $175/month just for my wife. I’ll have to pay about the same when I turn 65, versus ~$650 per year for TriCare Prime as a retiree, For us both.
I had an old high school friend contact me earlier this year trying to sell me on his company's financial products, and it very much fell into the "trying to save what you have" camp. It was an awkward moment when he was saying he aims for 5% on the high end, and I'm aiming for 10% on the low end with significantly more risk that he'd ever feel comfortable with (I told him jumping out of planes with machine guns will tweak your risk profile).
rock on paratrooper ✈🪂🪖
Oh oh oh! You have hit on a really important point about risk. Some civilian with a ROTH IRA worth say $2M is WAY less comfortable with market risk than a military retiree. For the civilian, that IRA is *everything* he has. If he loses it, he's toast. But for the military retiree getting a CPI adjusted pension, they can take on significantly more market risk without batting an eye.
@@the_bureaucrat That's what I was thinking. Unfortunately, all the retirement planning videos and websites out there assume that there is no income after retirement, so it's difficult to use their advice. Even Google isn't very helpful in figuring out how much should be in one's retirement account when one pops smoke if one has another $85k coming in yearly between retirement and VA disability. Surely other jobs have decent pensions too.
I’m pre-DOPMA so my retired pay is ancient history. However, the medical benefit is what’s really a life-saver. I’m from the generation that recruiters promised “free” healthcare for life but who believes a recruiter. Even with paying into a TRICARE plan you have the flexibility that your civilian counterparts don’t have. You’ll find many of your colleagues would love to quit their jobs but the loss of quality health insurance chains them down. TRICARE may not be perfect but what you and your family receive in costs and benefits gives you the career flexibility that you and your family EARNED.
I second this. When you first retire it may not seem as big a deal (especially if you are younger), but over time TRICARE saves you tens of thousands of dollars.
@@oldtop4682 i dunno, tricare hasn't been helpful to my family.
Tricare for Life with Medicare is a sweet benefit.
They pay just about everything, and there is never a hassle.
This is actually the hook that lured me back into the military. I did ROTC in the 90's for the college money and got off active duty as fast as I could...but then I was working at a plant where there were so many old dudes trapped working just for health insurance.
There is also a difference between active duty and reserve retirement. Reservist retirement is calculated under the point system. Unless a reservist has 20+ years of active service, eligibility does not start until age 60 (mobilizations over 90 days can partially reduce wait time).
True - ua-cam.com/video/8lHbP1EKAGY/v-deo.html
When I joined in 87 I was told by my then LtCol uncle that you won't get rich in the military but you can live very comfortably. Retired in 2018 SCPO (E-8) with 28years under the high-3 50% plan, did not take the sucker offer of cash to switch to the redux plan. Went to work for 7 more years because I bought into the 47 is too young to fully retire and also having tunnel vision on reaching 100% success rate with the Monty Carlo calculators. The 7 additional years being able to invest almost all the pay took us from living comfortably to living a very cushy verging on luxurious life. Between the pension and VA we only touch taxable investments for items like vacations. If SS stays the same then at that time there won't even be a need to touch the taxable or Roth's.
In the early 90's I got the same warning, but by the time I was 20 years in, my dad (who thought I was an idiot for joining) was flabbergasted at how beneficial service had been (degrees, experiences, travel, and of course $$)
Good info. If you live within your means, you can live well with your retirement and SS, not to mention any other retirement income you may have. I thank God I stayed in and retired (2000).
More and more, I believe that living within your means is the most important piece. I've seen some people with really high incomes who were as broke as can be simply because they always needed to have the newest car and replacement furniture.
One interesting point is the number of retirees "sharing" their retired pay with an ex-spouse, or two. This scenario can easily change an O6 retired pay amount to an O3 or less amount if child support payments are included.
That whole thing of the Former Spouse Protection Act does complicate things ua-cam.com/video/6ycs4Oc4ELY/v-deo.html
It’s all relative… many “civilian” workers face the same
It also depends on which Military Pension you got. They have been drastically decreasing the percent of pension over the years.
Most definitely, one of my jobs was traveling around explaining the retirement system and educational benefits. It went all the way up to the E5-E6 level and JO's that didn't have a clue on how the pay was computed with some not even knowing the system they fell under (High-1, High-3 or REDUX) High-1&3 both started at 50% for 20 while REDUX started at 40% for 20. Recruiters did not help with the lies they told.
@@kenm8162 I was an airman in 1986 but didn't retire. I did use my GI Bill. If I could do it over, I would of went to college and then went in as an officer. But it all worked out...
@@Rottingboards Would have, not "would of"
@@Karoke77 LOL, Sorry, I'm tired. So much for education. HA! Worked all day on my car project. Have a good day.
@@Karoke77 If you really want a laugh. I have three four year degrees and two technical collage degrees. 🤣😂 English was never my strong point.
Military retirement is great if your 20 year military experience allowed you to build private sector marketable skills without a lot of physical wear and tear on your body. Electrician, air traffic controller, firefighter, HR Specialist, logistics manager, pilot, accountant, computer technician etc. On the other hand, a 20 year infantry type (Special Operations even more) has probably beat up their body and probably doesn’t have a lot of skills the private sector is looking for.
In the United States being infantrymen could come in handy. 😄
Did 28yrs as an Electronics tech then followed it with 7 years in the IT field for the state before saying enough. Loved the job but couldn't stand dealing with the people that did not know of to take accountability.
I get the sense that the infantry issue has a lot to do with age.
I'll be retiring at around 51 or 52. I'm lucky enough to be in a career that can get better pay on the outside than in the military. My plan right now - haven't talked to an advisor about this, or my wife for that matter - is to invest 100% of my pay and VA disability. The goal is to get it to grow to the point that the interest plus the pay equals my salary once I hit 65. I won't be adding any more to it, but depending on how much I need to take out, it will continue to grow.
You will be fine. You have the right idea. It's not an exact science. It depends on where you live, lifestyle, and amount of debt.
@armymutt25A, one thing to think about is that your "interest plus the pay" doesn't necessarily have to equal your salary if your job is creating expenses. I'd suggest that the real goal is that "interest plus the pay" exceeds your expenses by the same amount as when you are working. You'd be surprised how much it costs to work.
@@the_bureaucrat True to some degree. If I go the direction I'm thinking, most of the non-reimbursable expenses will be from LLC registration fees. Everything else will be paid by the business, including travel to the work location. If I end up in the GS job, then yes, the expenses will be greater.
I'm at 22 years of service and intend to push through until 26 unless my family and body can still handle the lifestyle for another assignment or two. At that point, my retirement and investments will have me situated to be a gentleman of leisure, as you call it 😆
30 years Army Nurse Corps, I could have served 10 more years but took a GS position post retirement. I don't think I can handle 30 years of civilian nursing.
You have what most people will never have. Choices. Options. Freedom to decide what you want to do as a follow on career, like a small business or hobby farming selling eggs and produce at the local farmer's market on the weekends. That is the whole point of having wealth.
That's a good spot to be in. One nice thing about having that many years under your belt is that you can begin to document your medical issues without too much fear that it will "ruin your career". And depending on your rank, there are a couple Years of Service pay raises that are worth picking up.
Retired with 26 years of service at age 49. Gutting it out was sooooo worth it; it was better than winning the lottery.
Thanks Chuck. I figure my retirement is equivalent to over $1M in the bank.
Awesome.
I was hoping for more detail not just reinforcing the point that a lifetime payout is worth alot. All in all I appreciate your videos.
A couple people have made comments about being interested in "more detail". Can you shoot me a note at chuck.weko@gmail.com to elaborate?
Do this include being Class: a United States was born U.S.ARMY CITIZEN MILITIA OFFICER?
Not sure.
@@the_bureaucratthere are 3 Class of born establish in the United States Constitution Laws: 1) born, establish in Amendment XIV Section 1, 2) natural born establish in Article II Section 1 Clause 5, 3) was born;
Amendment XIV Section 1 is now “All naturalized or born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any citizen of life, liberty, or property, without due process of law; nor deny to any citizen within its jurisdiction the equal protection of the laws.”
“No person shall” Clause in Section 3 so person got replaced with citizen in the original text of Amendment XIV Section 1 and naturalized got place on the left of the or since it deals with foreign born citizens;
@@the_bureaucratthere are 3 Class of born establish in the United States Constitution Laws: 1) born, establish in Amendment XIV Section 1, 2) natural born establish in Article II Section 1 Clause 5, 3) was born;
Amendment XIV Section 1 is now “All naturalized or born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any citizen of life, liberty, or property, without due process of law; nor deny to any citizen within its jurisdiction the equal protection of the laws.”
“No person shall” Clause in Section 3 so person got replaced with citizen in the original text of Amendment XIV Section 1 and naturalized got place on the left of the or since it deals with foreign born citizens;
Article I.8.1 “provide for the common Defence and general Welfare of the United States;” applies to I at 100% for Life and My Family Members;
@@the_bureaucratas usual yt civil delete My post;
there are 3 Class of born establish in the United States Constitution Laws: 1) born, establish in Amendment XIV Section 1, 2) natural born establish in Article II Section 1 Clause 5, 3) was born;
Amendment XIV Section 1 is now “All naturalized or born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any citizen of life, liberty, or property, without due process of law; nor deny to any citizen within its jurisdiction the equal protection of the laws.”
“No person shall” Clause in Section 3 so person got replaced with citizen in the original text of Amendment XIV Section 1 and naturalized got place on the left of the or since it deals with civil domestic birth or foreign born citizens;
Article I.8.1 “provide for the common Defence and general Welfare of the United States;” applies to I at 100% for Life and My Family Members;
I just did my 20. I started out enlisted and finally decided to commission in 2021. I just jumped up to 2LT retirement pay and will soon make 1LT (the old system takes your top 3 years). I'm going to stick it out until I've at least been a Major for 3 years. Given that I make Captain next May, that means retiring right around 2030 or so. If I really wanted to, I could likely stick it out into my 50s. At this point, I view it as a supplement or replacement for social security. Given that I'm in the Guard, I won't see a penny until I'm 60. I'm really hoping that I'll have enough debt paid down that I'll be able to unofficially retire at that point and just get that monthly check until I reach the official social security retirement point.
Keep an eye on the Reserve Early Retirement System. Depending what status you did any deployments in, you might be able to retire with full pension long before age 60. ua-cam.com/video/t6y7t_yTfDE/v-deo.html
Have you ever looked at older entrants (i.e. enlisting or commissioning) over 40 and not being able to retire with pension or how to retire by extending past 60? Is there any hope for over 40 doing so?
I did a survey of all the retirement authorities a couple months ago (for a side project, not something I posted). And I'd have to look at the details, but I suspect that what really happens to them is that they can't "voluntarily" retire. The 20 year retirement is usually "voluntary" where the SM asks permission from the Service Secretary. But there are a bunch of other authorities including ones for age where the Service Secretary makes the decision to retire the SM. I made a note and I'll follow up on it.
In 2018, the Army changed their Military Retirement Pension Plan which was 20 yrs of services you get 50% of your base pay of the rank you retire at. Over 20 yrs of service you get the 2.5 multiplier. Now, all Soldier entering the Army after 2018 falls under the new Blended Retirement Plan which is 20 yrs of services you get 45% of your base pay and whatever you contribute to your Thrift Saving Plan (TSP), in other words the military's 401k.
True.
If you joined on or after * Sep 1980, but before 1 Jan 2018, you get the 50% of the average of the 3 highest years of base pay, not base pay of the rank you retire at. If you joined on or after 1 Jan 2018, you get 40% of your base pay for 20 years of service under BRS and 2.0% multiplier for years over 20. The BRS COLA is calculated differently too. It's 1 percentage point lower than the full CPI increase applied to other retired pay programs.
@@tgarner567 appreciate the correction.
@VonF80 Just trying to offer some additional clarity to the conversation.
I was medically retired at just under 16 years. The army gave me 40% and the VA gave me 100% P&T as I lost the use of my foot, lost my ankle, and collarbone was replaced, and several combat tours resulting in PTSD.
They said I will never get the army pension because I didn't get to 20 years. Is that true? I mean why do I get statements from dfas showing me receiving that 40% but never getting it? And when I called when I first got out they told me I don't get it at all. Huh? Confused.
Shoot me a note at chuck.weko@gmail.com. The Medical retiree pay has two different multipliers it uses (one based on disability rating and the other on years of service). Retirees get to "pick" which one they use.
not bad at all. say a E6 lives about 30yrs in retirement with a million asset that's 33k a year or 2750 a month. throw like 3k SSA on that, 5750 a month or 69k a year with no tax.
It's not a bad deal at all. Over my time in service I met three E6s who retired (or were about to retire). None of them lived like kings, but they certainly were in a much better position than they would have been in the civilian sector. In fact, one attributed his lack of advancement to his wife's cancer and his unwillingness to take assignments that left her alone. He was adamant that the health care was worth it.
If you can make it to 20.
Only about 10% make it across the finish line. (Enlisted)
I did it... and retired at 45. I still work, but most of that goes straight into investments. I don't work because I have to. I buy individual stocks here and there, but mostly I have a number of SP 500 funds that pay out dividens monthly/quarterly for my fun money and others in an IRA for my kids.
The folks who really get screwed are the ones who are at ~15 years and get a medical disability retirement. At first it looks like a good deal, then all the fine print kicks in.
@the_bureaucrat yep. I saw that a number of times. They'll reasses your disability and cut your medical payout.
Pretty much anyone doing more than 4 but less than 20 are getting the least amount of pay and benefits for their service.
Before anyone cries about selfishness instead of service. Just realize this.
#1 that service has an unlimited clause. You are expected to do your job even if it results in your death.
#2. There is no overtime or on call pay. You are expected to work until you are releaved. That means a regular week tends to be 60 hours. A long week is well over 100 hours. You are on call 24/7/365 for four years at a go, which can be extended at any time due to the needs of the service.
Understanding the value of a military retirement...
Think of your monthly payment as an anuity.
Now consider that $1,000,000.00 invested at 5% rate of return would net you approximately $48,000.00 per year.
This gives you a realistic way to approximate the "value".
Be certain to account for tax advantage as well.
Add any disability , social security, or special pays as well.
And yes, don't forget to count the cost of medical insurance as part of that "value".
Best of luck,
Phil
Thanks, Phil.
I always used current pension $ multiplied times life expectancy (76 for average) to figure current value of my pension. Trying to find a calculator that figures out the equivalent annuity value is problematic. I don't think one exists that takes in the annual COLA.
I'm not sure how the US runs the military pension plan, but the Canadian military force members pay into the pension plan. I believe the government matches these contributions and the plan is supposed to be administered by a 3rd party fund manager. On average, retirees draw only 5 years of pension before taking a dirt nap.
Sounds like the Canadian military pension is like our public service pension system, like teachers, firefighters, or police. US military, we don’t pay into our pension plan. We have another option to pay into our own retirement plan so by the time you hit military retirement, you can have 3 sources of retirement income (military pension, disability, and personnel retirement savings). Once social security hits (67yrs old), that totals to 4 retirement streams
@CasChet1 is right, US military Service Members don't pay into their pension from their own pockets. The services pay something called a "retired pay accrual" out of appropriations into a pension fund. I always thought of it as a bit of a shell game (tax dollars shifted between accounts), but the main effect is that the services worry about the cost of funding the pension without dragging the SMs into it.
I retired from the CAF in 2012. I was a Spec 1 SGT. Pension take home is $1900/month. Been collecting it for 12 years now and opted for the medical/dental coverage after release. Went back to school and got a $220K/yr job. I've been investing my pension for quite some time and I'm well on my way to a comfortable retirement with a second pension from the company I work for. During my exit interview, the Squadron Chief says to me "keep at it, you'll be in my chair in no time". I just looked up the pay scales for a SCWO. I earn more than twice that right now without the responsibilities of the SCWO! One of the reasons I got out was the 40% pay cut I felt I was taking the moment I was eligible for my pension.
@@CasChet1 The way the Canadian one works is that once CPP - what you call OAS - kicks in, they reduce the pension by that amount, so we never really get the benefits of CPP although we pay into it at the maximum rate. What really sucks is that our pension may be "split," with a spouse for income tax purposes, but CPP can't. The effect is that our post tax income level actually drops when OAS locks in.
For those saying the healthcare is worth more than the pension.. umm no and heres the math... I'd say TFL is worth $350 a month (calcs are in another comment) Prior to 65, and assuming you don't work, it's worth an ObamaCare premium + any additional copays. I assume age 55, 50k a year income and you hit the out of pocket max/catastrophic cap every year. An obamacare gold plan is $410 a month with a max of 5500.. compared to Tricare selects catastrophic cap of about 4500... a 1000 a year difference. ObamaCares premiums don't count towards the max but tricare selects do, effectively making tricare select premiums 0 for comparison (since you already paid them in the cap/max comparison)... so military retiree healthcare at 55 is worth the obamacare premium plus 1k a year.... about $5900 a year... I can safely say that any military retirees pension is more that $5900 a year... or about $500 a month. Also if your income was say $25k a year the obamacare cost would be even lower than what I present here... $6 a month premium with a $1950 out of pocket max.... in that case you might be better off with obamacare especially if you didn't live in a tricare prime area. Therefore the healthcare benefit might not be worth much at all... if you retired as an E5, chose not to work and embraced minimalism (or took a vow of poverty).
I like the way you think. I gotta run these numbers myself, but this is excellent work.
@the_bureaucrat there are lots of variables.. I assumed single but family coverage may be different (although obamacare subsidies might be higher too). Also if you were high income there would be no obamacare subsidy so Tricare would be worth more to you. Obamacare also can cost more if you smoke making tricare more valuable by comparison. However in many cases, the tricare retiree benefit may be worth less than many think as I presented.
Non-Vet here: CalPers Retiree... Just looking at the Value of a Pension, being very Conservative on Valuation... Take Yearly Net Pay & divide by .04... Just my Civil Service Pension has a Rough Value of around a Cool Million... Social Security adds another $400k... Definitely get a Financial Advisor... But find one who understands how to Value Pensions. The Military Healthcare Benefits... Are much better than the Healthcare I can afford.
That point about finding a financial advisor who understands how to value pensions is key. At one point I worked with an advisory office which simply didn't believe that the Miltiary pension (retired pay) existed. We didn't meet after that.
@@the_bureaucrat [FacePalm] How does a financial advisor NOT know Pensions Exist? Unless he was just a Salesman.... Maybe?
It would have been appropriate to invest 30 seconds explaining that military retirees traded their youth for the pension.
I gave 37.5 years of my youth so other Americans can continue to be completely ignorant about what the military retiree does/did for their pension. I deeply believe it was a fair trade. The current blended retirement system is a clear indicator of how the American voter wants to erode this moral contract with the very people who earn & maintain YOUR freedoms.
@dang3343, I think you are on to an entirely different point that bears consideration in its own right. If you approach BRS from the angle of "What does this mean?", I think its more a case of Congress thinking they are helping while creating bigger problems.
The value of the retirement as part of your net worth is useless. You could die the day after you retire from active duty or 50-years after that date.
With the exception of the SBP you can’t pass on your retirement to your spouse or child like you would with the rest of your net worth.
Also you can’t take a loan against this asset like you can with any other asset you calculate as part of your net worth.
The real value of your retirement is reducing the income requirement you will need when you retire for the final time.
WOW! I’ve never thought of it that way. The pension; Can’t pass it on, can’t take loan against it. Then again, I’ve always thought of the pension as a cherry on top of a well diversified portfolio of stocks and real estate. End goal is to out live the pension 😅
Is the pension even an asset to begin with? Isn't it just regular monthly payments, rather than a nest egg of money from which you are paid interest from?
@resterAnonyme - This is a brilliant point...I gotta think about it a bit.
My thought was always "in order to self fund a monthly income of X, I would need an asset of Y value." Therefore the pension is "like an asset".
Lemme think a bit.
@@the_bureaucratAnother thing to consider, SBP is an insurance product. When the member passes on the retirement completely goes away leaving no retirement asset. It’s the proceeds of the insurance the member paid into that is the actual asset and is what is paid to the spouse or child upon the members death.
@@the_bureaucrat Since it is backed by the full faith and credit of the US government, it can be considered the equivalent value in Treasury Bills. You could give it some sort of discount based on the fact that it dies with you, but you'll be dead, so do you care? If you need to fund dependents after you die or want to leave someone something, you can invest for that purpose or buy some form of life insurance product.
Medicare and Tricare for Life is fantastic. Best benefit of all.
The pensions can be very lucrative, but this analysis is way too simplistic. Kind of useless.
True. And you're right, this is an entry point to the deeper topics.
Never did provide ANY information about the subject of the military retirement value.
Sorry about that.
I did everything right despite being a fat lazy slug...I knew what I wanted to do as far as a billet. I went to a junior college first and was awarded a STEM degree . I entered the Air Force reserves in 1979 and went on active duty in 1982. Retired in 2003 under the old world war 2 retirement system, 50% base pay at 20 and 2.5% added for every additional year. I was awarded 100% VA disabilty in 2016 . I draw soc sec. My 2 sons have careers and have left. My wife retires now with her pensions and Soc Sec. We have a beautiful home. Our net worth is 1.5 m. I am typical.
It's a hell of a plan. And you are right...this is fairly typical.
I still like Ag and Au.
Indeed.
Didn't know an e4 could retire
They couldn't when I was in...
They stopped doing e4 retirements in the late 90’s. I knew an E5 retire in 2007. Never saw an E5 retire after that
I thought the same thing. That report showed 4 E-4's retiring in 2022 with a Regular Retirement. 3 at exactly 20 years and 1 at 25 years. There's probably more to the story with them. They had 126 E5.
I mean the main benefit for all US milltary veterns ais simply base access which if you have a base local to you which as vetern is pretty likely you can go shop aat the comcary and exchange with no federal tax and great quality products at well normal prices and they tend to lie about MSRP alot buit still no tax... Also you have access to the base pharmacy that normally has cheap and mostly free medicine for veterns though the milltray can't make up it's mind to keep ot or not... Also you ghave all those vetern discounts at stores... while not very many these days they still exsist... And if you don't go to the a VA hospital(Which I have no idea why anyone would) you can still get free medical gear if you need it... a collage scolorship also tons of other little things... But anything more and you need to earn it... Also unless you reteer after 20 years or are an mid rank offcer then your axctaully pension won't matter at much just being a nice monthly cash bonus... Which I know this as both my grand parpanters are veterns by Grandma after a sghort career to be a full time mom as this was before the US milltary figured out how wemon worked... Something that it discovered only in the past few years... And my grandpa reteered after 20 years and both served in civil service my grandpa leaving that when the contractors took over. So yeah my advice if you actually wnat more then base access after your service serve more then 20 years in the milltary and rank up to the highest rank you can.... My grandpa regarts not making the final push to master chief...
I don't know...I feel like the commissary benefits have diminished over time relative to some the big box stores.
@@the_bureaucrat Actually the use of the commissary is a great value. We shop at the commissary about once every few months, stocking up on meats and canned goods, the savings are significant.
Military is another government job. About 20% of workers are Fed, State and Local government workers. The average government worker makes more in total compensation than the average working taxpayer. And these government workers are typically less skilled, especially in the security sector.
Police, Fire and Military are the only few jobs where you don’t have to have the required skills before being hired. Teacher, Social Worker, they want to see a 4 year degree and often Graduate degree to hired, plus work experience.
I guess they could just contract out defence to Mercs.
Not sure you are that well informed on the subject of the security sector.
Well Police, Fire, and Military require you to be trained and pass fitness tests. Not everyone with degrees would be able to pass those tests, as they are not easy.
You make a good point about the timing of military training and who bears the cost of it.
@@ickster23 - give chump time & he will to Musk
Blended retirement is a joke. Besides the medical, it’s not worth doing 20 anymore.
The worst joke about BRS is that I don't think it's even going to benefit the people who thought it was a good idea.
I am now dumber for watching this. There is nothing a financial advisor will tell you that you can't learn on your own. Conventional wisdom will yield conventional results. 80/20 portfolio with a 4% draw down rate, yada, yada, yada. That's not how wealthy people get wealthy. Military retirement is awesome. Let's hope our economy doesn't collapse. Be a prepper if you want to survive the next 20 years. That is all.
Roger.
A discussion of this type without addressing survivor benefits is a waste of time.
Also, the life expectancy of someone at age say 45 (average military retirement age) is well above 80 years old..
Interesting subject but useless information and presentation.
The life expectancy thing is always tricky. I used the "life expectancy at birth" just because longer life is greater value.
Why you wear a tshirt under a shirt like you are still in the military?
I also do that....have since before i even joined. I feel naked without an undershirt.
It keeps sweat from coming thru my shirt.