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View Full Version : CSB/Redux - Cola Cuts -



fufu
02-13-2014, 08:53 PM
The time has come for me to decide on the redux.

I wasn't considering this as a real option until Congress cut the COLA by 1%. But, now that the COLA is the same across the board, I'm tempted to take the redux.

No....I'm not going to buy a car. I was just going to throw the ~22K in one of my mutual fund accounts. The wife and I want to have a paid for home by the time I am 48. That is 15 years from now. There is so much uncertainty about the future of military retirement benefits, that I feel like I should take anything I can get now. I don't think they will pull the rug out from under me at 18 or 19 years, meaning change the retirement to a pension that starts at 55 or something. However, what was once untouchable, is now the target of Congress and this administration.

I plan on doing no more than 22(my oldest grads HS when I hit 22 YOS). So, that will give me about 47% at the end of my career. And...if the old lady leaves me...she'll get less! LOL

Whatcha think?

sandsjames
02-13-2014, 09:08 PM
The time has come for me to decide on the redux.

I wasn't considering this as a real option until Congress cut the COLA by 1%. But, now that the COLA is the same across the board, I'm tempted to take the redux.

No....I'm not going to buy a car. I was just going to throw the ~22K in one of my mutual fund accounts. The wife and I want to have a paid for home by the time I am 48. That is 15 years from now. There is so much uncertainty about the future of military retirement benefits, that I feel like I should take anything I can get now. I don't think they will pull the rug out from under me at 18 or 19 years, meaning change the retirement to a pension that starts at 55 or something. However, what was once untouchable, is now the target of Congress and this administration.

I plan on doing no more than 22(my oldest grads HS when I hit 22 YOS). So, that will give me about 47% at the end of my career. And...if the old lady leaves me...she'll get less! LOL

Whatcha think?

Before people jump in and tell you how evil Redux is, I'll say this. It depends on your situation. I took it. Overall, it made about a $200 a month difference in my retirement check. But I used the cash I received to refinance my house and have house payments that more than make up for that $200 loss. So I will have about 3 years after I pay the house until I'm in my mid 60s and it won't make a difference anyway. So, for me, it was the right decision.

Of course, consider your options and what's important to you. Hell, even if you weren't going to invest it it's still up to you.

Chief_KO
02-13-2014, 09:08 PM
The COLA cut has been overturned.

For the majority of folks REDUX and the CSB is a bad deal (why else would Congress propose it?)

Seriously run the numbers and decide for yourself, by my personal opinion is to pass on REDUX/CSB opt for the High-3 plan.

Class5Kayaker
02-13-2014, 09:13 PM
I usually advise folks against it, but everyone's situation is different. The first thing I always point out is they've been offering the $30K "payout" for 14 years now but the payout amount hasn't increased a dime (should have due to inflation, significant pay raises in the first half of the last decade, etc). So that $30K isn't as good of a deal now as it was back in FY2000 (not that it was a good deal for very many folks back then even).

Usually, it's only smart to take it if you have a ton of high-interest debt right now that you need to pay off (which you probably don't based on your plan to invest the $$).

Here's a link that has some handy calculators to help you make an informed decision:

http://themilitarywallet.com/csb-redux-retirement-system-calculator/

BRUWIN
02-13-2014, 09:18 PM
The bill to reverse the cola cut just passed the house. They find some other way to screw us though...look for tricare increases that will make the cola cut seem like a a picnic.

Measure Man
02-13-2014, 09:19 PM
The time has come for me to decide on the redux.

I wasn't considering this as a real option until Congress cut the COLA by 1%. But, now that the COLA is the same across the board, I'm tempted to take the redux.

The COLA cuts have been repealed.


No....I'm not going to buy a car. I was just going to throw the ~22K in one of my mutual fund accounts. The wife and I want to have a paid for home by the time I am 48. That is 15 years from now. There is so much uncertainty about the future of military retirement benefits, that I feel like I should take anything I can get now. I don't think they will pull the rug out from under me at 18 or 19 years, meaning change the retirement to a pension that starts at 55 or something. However, what was once untouchable, is now the target of Congress and this administration.

I plan on doing no more than 22(my oldest grads HS when I hit 22 YOS). So, that will give me about 47% at the end of my career. And...if the old lady leaves me...she'll get less! LOL

Whatcha think?

I think taking Redux is a sucker's bet for most people. Maybe, just maybe it might make sense of you are staying in 30 years, cuz then you still end up at 75%.

It's already been demonstrated that the reduced COLA alone can cost you up to $80K by the time you're 62...not to mention that you're getting less of a retirement to begin with! So your 47% at 22 years would be 55%, or an 8% of, say, MSgt base pay is roughly $4400 per year, or so, yeah? So, your added retirement will meet that $22K in about 5 years. Okay, so you've made 10 years interest on it since, but still...You have an expected life span of 50 years in retirement...so, you're talking 200K+, PLUS the COLA difference?

While I get the uncertainty and all that. IMO, there is almost no way that $22K is going to be worth it, unless you get extremely lucky in some kind of start-up investment.

DOD offers you the redux retirement for one reason and one reason only...it saves them a shitload of money. And by "saves" I mean it saves them your money.

fufu
02-13-2014, 09:19 PM
I should have stated I'm certain that I'll be getting orders soon. While I'm not upside down on my home, I'll probably have to produce some cash at closing. I know the wife and I would feel more comfortable having a soft landing.

Measure Man
02-13-2014, 09:20 PM
The bill to reverse the cola cut just passed the house. They find some other way to screw us though...look for tricare increases that will make the cola cut seem like a a picnic.

Passed the Senate too. It's a done deal.

fufu
02-13-2014, 09:26 PM
Passed the Senate too. It's a done deal.

Thanks. I heard it passed the house a few days ago. I'm glad they figured that out before I have to make this decision.

Stalwart
02-13-2014, 09:43 PM
I had been advised by our financial guy to (for my particular situation) only take the CSB/REDUX option if I would be staying until at least 26 years and would be in a tax-free zone when I elected the option, or if I planned on dying not too long after I retired. I did not take CSB/REDUX & my situation was based following particulars:

1. I was commissioned with 12 years of enlisted service and to retire 'as an officer' I would have to do at least 10 years of commissioned service -- taking me to a total of 22 years service at least.
2. The timing of my promotions and longevity raises meant that I was really getting 2 for 1 (promoted to O2E on the same paycheck that I went over 14 years service, to O3E on the same paycheck that I went over 16 years total service.)
2. The way promotion timing worked, I would probably be putting on O4 right at my 10 years of commissioned service, and would obligate service as a result of the promotion. As it turned out I promoted from the below zone, so a bit less total service if I do the minimum obligated service and retire.

A few people have said it -- it all depends on your situation. Do you have high interest debt you could pay the principle down with the CSB money? Do you have an investment vehicle you think could outperform the loss in your retirement pay? Maybe a one time consultation with a financial planner could aid in your decision making.

All the best ...

sandsjames
02-13-2014, 10:32 PM
The experts are going to tell you one thing. The overall number of what you will lose over the next 20 or so years. I was much more focused over how much I'd lose per month, what I would gain from taking it, and if that was still enough money to live comfortably on. The answer was yes.

I will throw out a disclaimer. I don't save money. I currently have $5.27 in my saving account, with no other investments. If I was making that extra couple hundred a month I wouldn't be investing. I'd be spending it every month anyway, so over the long term it wouldn't add up to that big number the experts are going to quote you. So, knowing my spending habits, and being able to use the lump some towards a refinance of our home, it was really an easy decision.

technomage1
02-13-2014, 11:27 PM
Most of the time redux isn't the best option. However, there are exceptions like massive debt, family longevity (has everyone in your family keeled over at 50?) and the ability to invest that for a greater return than the higher retirement pay would result in. If you're not in debt, have a reasonably long life expectancy, and aren't a financial whiz I'd say take the 50%.