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Thread: House Panel Backs Major Military Retirement Overhaul

  1. #31
    Senior Member Stalwart's Avatar
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    Quote Originally Posted by sandsjames View Post
    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.
    The way it is written, that is the plan.

    Quote Originally Posted by sandsjames View Post
    I'm talking in general about someone having a 401k as their only option. Not a military person. Just your average Joe.
    And I didn't say a 401k only was the best idea either.

    Quote Originally Posted by sandsjames View Post
    I may have to post in caps.
    Nah, I got it.

    Quote Originally Posted by sandsjames View Post
    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.
    Yeah, many people have lost money; that is exactly why a portfolio should be diversified to absorb fluctuations in the market (again, a mix of stocks, bonds, mutual funds, reserve cash and insurance.) I wouldn't recommend anyone try to make a living playing poker, the odds are in the house's favor; the stock market is overwhelmingly in favor of a long term investor ... but yeah ... shit can happen. I would argue that if done systematically and over time (long term) the stock market is good piece of a retirement portfolio. If your aunt and uncle had everything in a 401k and didn't diversify, they should really find their investment manager and punch him in the face, he gave them shitty advice.
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  2. #32
    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by FLAPS, USAF (ret) View Post
    While not a fan of a 401K that would completely replace our current pension, the House Bill is susprisngly pretty well balanced. Reduce the current pension to 40% AND have a TSP with matching funds!
    I agree that this plan does not seem like it is that horrible an idea.

    Seem like it would especially benefit those folks who don't go 20 years and decide to get out at 10 years...at least they won't be leaving empty-handed.

    For those who stay 20+...it would be interesting to see some models run on how a person would've done had this plan been in place for the last 20, 30, 40 years, etc. Would be a nice calculator for someone to develop.

    Seeing as how the real reason for a military retirement overhaul is to save the govt. money...I wonder if this would actually do that....now with all the people who don't make it to 20 still getting a match, and those who do getting a 401K plus a pension...I wonder how that really works out to the govt. saving money.

    My only issue, however, is that this new retirement benefit will be easier to incrementally reduce in the future, especially the matching funds. "Well, in these tough economic times, we will 'just' reduce the matching funds from 5% to 3.5% for the next three years, blah, blah, blah." Then, as time goes on the matching goes away completely. I can see it now.
    Last edited by Bos Mutus; 04-27-2015 at 06:10 PM.
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  3. #33
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    Quote Originally Posted by Bos Mutus View Post
    I agree that this plan does not seem like it is that horrible an idea.

    Seem like it would especially benefit those folks who don't go 20 years and decide to get out at 10 years...at least they won't be leaving empty-handed.

    For those who stay 20+...it would be interesting to see some models run on how a person would've done had this plan been in place for the last 20, 30, 40 years, etc. Would be a nice calculator for someone to develop.

    Seeing as how the real reason for a military retirement overhaul is to save the govt. money...I wonder if this would actually do that....now with all the people who don't make it to 20 still getting a match, and those who do getting a 401K plus a pension...I wonder how that really works out to the govt. saving money.
    Right now, I don't think the gov expects to save any money with this new plan. That said, I also don't expect the promise of 'matching' will be upheld. In fact, I expect sometime in the future they will incrementally reduce matching on those currently serving. What's that leave them, 40% retirement pension...protected (for now) under mandatory spending.

  4. #34
    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by FLAPS, USAF (ret) View Post
    Right now, I don't think the gov expects to save any money with this new plan. That said, I also don't expect the promise of 'matching' will be upheld. In fact, I expect sometime in the future they will incrementally reduce matching on those currently serving. What's that leave them, 40% retirement pension...protected (for now) under mandatory spending.
    I think the pension is the big liability for the govt...and the thing they most want to get rid of.

    Perhaps, when they find in 20 years that MSgts are retiring with $1M in their 401K and a pension...it will provide the "justification" to get rid of the pension.

    I don't know for sure...but, I can see that maybe this is just a more palatable first step toward further reductions in the future...my spidey sense tells me the goal is to get rid of the pension though and convert to the 401K matching system like everybody else in the country.
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  5. #35
    Senior Member Stalwart's Avatar
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    Quote Originally Posted by FLAPS, USAF (ret) View Post
    Right now, I don't think the gov expects to save any money with this new plan. That said, I also don't expect the promise of 'matching' will be upheld. In fact, I expect sometime in the future they will incrementally reduce matching on those currently serving. What's that leave them, 40% retirement pension...protected (for now) under mandatory spending.
    I don't use the higher math that went into it. In talking to a friend who still works on the Hill, the savings are from the lower pension. Even with the matching funds, reducing the total payout (percentage) of the pension saves money, which incrementally increases as people live out retirement (and as medical science keeps us alive longer and longer.) Based on the CBO scoring (non-partisan so better numbers), it is not expected that all enlisted service members will contribute to the 401k, with a surge who do so after their first commitment. It is expected that most officers will contribute beginning at commissioning.

    The matching funds (as of now) only are made until the 20th year of service. So ... let's say that a service members stays more than 20 YIS, they can still contribute into the 401k, but the government will no longer match funds. If I were getting this retirement system, and was staying beyond 20 years, right about the time I became an empty nester I would pump as much money into the 401k as I could if the funds were being matched. As it is written a service member couldn't do that.
    Last edited by Stalwart; 04-27-2015 at 07:29 PM.
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  6. #36
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    Quote Originally Posted by Stalwart View Post
    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.
    That 'paying down my house faster' is something i hope to do if the job interview i just got done with at Lowes pans out. Even if its only an additional say 200$ a month against it, that still adds up to paying it off sooner.

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    Senior Member Stalwart's Avatar
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    Quote Originally Posted by garhkal View Post
    That 'paying down my house faster' is something i hope to do if the job interview i just got done with at Lowes pans out. Even if its only an additional say 200$ a month against it, that still adds up to paying it off sooner.
    It does. Be sure you specify it is against the principle; my brother got slightly burned on that, about $1,500 thT was applied to the interest ... Granted ... It migrates the interest payoff quicker ... But does not reduce the total interest paid.
    The most important six inches on the battlefield is between your ears.

  8. #38
    Senior Member CYBERFX1024's Avatar
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    If a matching TSP/401K system is offered since day one of enlistment that also includes a 40% retirement at year 20 then I don't find fault with this at all. I would much rather have a matching TSP than a retirement IF I make it to 20 years of enlistment. That would have been really good for me when I was doing 10% for a number of my years while I was in the Marines and the weren't contributing anything. I am now a GS-11 and I am doing 10% now with another 6% coming from the Feds, all the while doing being more aggressive in my funds because I am still only 31. I currently had a 9% return off of my investments last year and 13% the year before that.

    I would much rather have that than imaginary retirement or Social Security.

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    Quote Originally Posted by Stalwart View Post
    It does. Be sure you specify it is against the principle; my brother got slightly burned on that, about $1,500 thT was applied to the interest ... Granted ... It migrates the interest payoff quicker ... But does not reduce the total interest paid.
    Thanks for the tip!

  10. #40
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    Quote Originally Posted by CYBERFX1024 View Post
    If a matching TSP/401K system is offered since day one of enlistment that also includes a 40% retirement at year 20 then I don't find fault with this at all. I would much rather have a matching TSP than a retirement IF I make it to 20 years of enlistment. That would have been really good for me when I was doing 10% for a number of my years while I was in the Marines and the weren't contributing anything. I am now a GS-11 and I am doing 10% now with another 6% coming from the Feds, all the while doing being more aggressive in my funds because I am still only 31. I currently had a 9% return off of my investments last year and 13% the year before that.

    I would much rather have that than imaginary retirement or Social Security.
    If this were my retirement plan, and coupling that with the amount of deploying I have done (which is an opportunity to siphon a lot of money into investments without paying tax on your salary at the time) ... Whoa
    The most important six inches on the battlefield is between your ears.

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