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Thread: House Panel Backs Major Military Retirement Overhaul

  1. #21
    Senior Member Stalwart's Avatar
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    Quote Originally Posted by FLAPS, USAF (ret) View Post
    Looking at risk, unfortunately few people predicted the stock market crashes/corrections over the last 30 years. For millions of people in 2008/9, not only did they lose up to 50% of their investment value, but they also lost their jobs...which of course forced them to spend much of what was left in their investments long before they could wait for that upturn in the market. Bottom line, they lost everything. That's the risk everyone needs to accept before they invest in the stock market. My advice is, ensure you have zero debt (if possible) before jumping into the stock market. That way you can reduce the risk of losing EVERYTHING if the market crashes.
    I lost money too, but still came out ahead based i gains I made before then. Again, it is not zero risk, but a calculated risk.
    I would not argue to have zero debt, but manageable debt.

    Also, a retirement fund should be diversified between investments (stock, money markets and bonds), cash reserves and life insurance (I guarantee we will all die one day.)
    Last edited by Stalwart; 04-27-2015 at 04:39 PM.
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    Banned sandsjames's Avatar
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    Quote Originally Posted by Stalwart View Post
    It is too bad you did not read the whole thing, there are some good facts in there; don't let them get in the way of you not understanding a complicated issue that cannot be summarized in a quick bullet or two.

    Yes, it is an average. There is no guarantee, but in the long term it is the best thing you can do.

    Also, did you read how the new retirement plan would be structured? The 401k-styled portion of it is IN ADDITION to a 40% of base pay pension at 20 years of service. To invest in an investment plan (401k or other) that after 20 years failed to make enought to at least equal (much more likely to surpass) that 10% difference would be highly unlikely.
    I'm not talking about the 401k as it relates to the military. As a matter of fact, I posted earlier that a 401k was crazy IF it was one's only plan.

    My statement stands whether you think I understand or not. Having a 401k as your retirement plan is crazy because it's a gamble. Don't let simplicity get in the way of your biased support for the "safety" of the stock market.

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    Banned sandsjames's Avatar
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    Quote Originally Posted by Stalwart View Post
    Again, it is not zero risk, but a calculated risk.
    I would not argue to have zero debt, but manageable debt.
    Hahahahahahaha....keep drinking the kool-aid. Please explain to me, in all your wisdom, how some debt, no matter how manageable, is better than no debt.

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    Senior Member Stalwart's Avatar
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    Quote Originally Posted by sandsjames View Post
    Hahahahahahaha....keep drinking the kool-aid. Please explain to me, in all your wisdom, how some debt, no matter how manageable, is better than no debt.
    That isn't what I meant. I would not wait until having zero debt to invest money.
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    Banned sandsjames's Avatar
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    Quote Originally Posted by Stalwart View Post
    That isn't what I meant. I would not wait until having zero debt to invest money.
    That makes more sense, assuming one believes that "investing" is a smart thing to do.

    I'll continue to spend it while the dollar is worth a dollar and while I'm young enough to really enjoy it. Who knows...10 years from now I could be dead and lost out on all the fun I could have had by saving for retirement.

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    Quote Originally Posted by Stalwart View Post
    That isn't what I meant. I would not wait until having zero debt to invest money.
    I would say it depends on expected return on investment. How much interest are you saving by paying off debt vs expected return on investment? Also, many people 'assume' they'll get a greater return, but fail to calculate market risk and capital gains. Any way you cut it, zero debt (and maintaining it) is always the safest bet.

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    Senior Member Stalwart's Avatar
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    Quote Originally Posted by sandsjames View Post
    I'm not talking about the 401k as it relates to the military. As a matter of fact, I posted earlier that a 401k was crazy IF it was one's only plan.
    And it would be crazy, if the 401k was the only part of this plan. Which is why I don't understand your aversion to the plan since the 401k is a small part of it.

    Quote Originally Posted by sandsjames View Post
    My statement stands whether you think I understand or not. Having a 401k as your retirement plan is crazy because it's a gamble. Don't let simplicity get in the way of your biased support for the "safety" of the stock market.
    Where I think you are either not understanding or not getting it is that under this plan, there is a really, REALLY remote chance of a service member (who contributes into the 401k-like retirement plan) from having less money coming in after a 20-year career than now. The chances are actually quite high that a service member (for example, an E6 who gets 40% of their base pay + supplemented funds systematically withdrawn from the 401K) will bring in more than you do after 20 years of service. Based on that, the VFW & Iraq & Afghanistan Veterans of America have endorsed the plan. The MOAA is a bit standoffish, but mostly because under the proposal the government will only provide matching funds up to your 20th year of service and not after you are 'retirement eligible.'

    And again, I don't think the stock market is 100% safe or a guarantee. I will argue it is the best long term investment you can make (I am defining long term as 20+ years.) In large part (for simplicity's sake) I am basing that on 22 years of investing and even with the loses from 1998 - 2008, our current portfolio is worth about 3.5 times the amount of money I have put into it.
    Last edited by Stalwart; 04-27-2015 at 05:41 PM.
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    Senior Member Stalwart's Avatar
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    Quote Originally Posted by FLAPS, USAF (ret) View Post
    I would say it depends on expected return on investment. How much interest are you saving by paying off debt vs expected return on investment? Also, many people 'assume' they'll get a greater return, but fail to calculate market risk and capital gains. Any way you cut it, zero debt (and maintaining it) is always the safest bet.
    No argument, zero debt is preferred. But for example ... if someone owns a house, even if they double up on payments and would delay systematic investment while paying off the house (say for 10 years) I would suggest to start a small systematic investment that compounds annually and then putting the interest back into the investment.
    The most important six inches on the battlefield is between your ears.

  9. #29
    Senior Member Stalwart's Avatar
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    An interesting sidebar conversation on this came up with a friend based on the fact that many service members may actually get more than 50% retirement at 20 years based on this plan. While "utopistic" thinking, imagine if at about the 15 or so year mark, we had a fair portion of the (at the time) generation of senior NCO's & mid-grade officers who were looking at actual financial independence -- not saying retiring to the Caribbean as small time rulers but being able to live comfortably by combining their 40% pension and their retirement portfolio ... would they be 'better' leaders? Would they be more likely to care a little less about being a careerist since their future is secure?

    I ask since I remember an odd day a few years ago when I (at about 20.5 years of service) was going over our portfolio with our investment guy and I had sticker shock at how well the portfolio was performing. I won't say the sky parted and the sun shone down and I had an epiphany ... but the security of knowing that (barring getting court martialed) we had the ability to live comfortably for the rest f our lives was very liberating. I still work hard, am hoping to get promoted once more and all that ... but if I don't it isn't going to be the end of my financial world or create hardship.
    The most important six inches on the battlefield is between your ears.

  10. #30
    Banned sandsjames's Avatar
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    Quote Originally Posted by Stalwart View Post
    And it would be crazy, if the 401k was the only part of this plan. Which is why I don't understand your aversion to the plan since the 401k is a small part of it.
    Holy shit...I'm not averted to the plan. I even stated, in my first post, that I have no problem with it as long as it's grandfathered so those who end up with it are aware when they sign up.

    I'm talking in general about someone having a 401k as their only option. Not a military person. Just your average Joe.



    Where I think you are either not understanding or not getting it is that under this plan, there is a really, REALLY remote chance of a service member (who contributes into the 401k-like retirement plan) from having less money coming in after a 20-year career than now. The chances are actually quite high that a service member (for example, an E6 who gets 40% of their base pay + supplemented funds systematically withdrawn from the 401K) will bring in more than you do after 20 years of service. Based on that, the VFW & Iraq & Afghanistan Veterans of America have endorsed the plan. The MOAA is a bit standoffish, but mostly because under the proposal the government will only provide matching funds up to your 20th year of service and not after you are 'retirement eligible.'
    I may have to post in caps.

    And again, I don't think the stock market is 100% safe or a guarantee. I will argue it is the best long term investment you can make (I am defining long term as 20+ years.) In large part (for simplicity's sake) I am basing that on 22 years of investing and even with the loses from 1998 - 2008, our current portfolio is worth about 3.5 times the amount of money I have put into it.
    Congratulations. I'm happy for you. And just as your story is a success, there are plenty who ended up on the other end of the spectrum. There are many poker players who make a very good living from playing poker. I wouldn't recommend that as a means of making money for the average person.

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