The coming battle over military retirement.

The Army, and the other services, of course, like to say that people are their most valuable asset. Not surprisingly, they’re pretty much the most expensive one as well.

Recently, the Military Compensation and Retirement Modernization Commission returned a report on how to modernize the current military retirement system to reduce costs to the government. It’s recommendations are  not especially popular with the military population.

In simplest terms right now, 20 years of service earns you retirement at half of your final basic pay, starting immediately, for life, adjusted for inflation. 30 years earns three-quarters pay. It’s somewhat more complicated than that, actually, but that’s close enough.

The MCRMC has recommended reducing the pension soldiers receive, boosting a 401k style investment program, delaying payment of retirement until 60 years of age, and other changes. Worse still, they want to slough retirees off the TriCare For Life medical program and onto Obamacare.

Jonn at This Ain’t Hell discusses just what a 20-year pension means.

I retired at the age of 38 along with my family. I went to college the month after I left the service. It was a fairly tough transition – I worked a full time job with a security company as a rent-a-cop on a construction site, I also worked as a work/study student in the campus VA office, all while carrying a full load of classes. The pension helped us meet our transition expanses until I graduated.

After college, I went into sales with an investment company, a totally foreign environment. While I struggled to learn the business and how to teach other people what they needed, the Army pension paid the bills. Eventually, I failed at that business because some people are too stupid to help, and I’m no salesman,

When I went to work for the National Archives, most of the people my age had been at the job longer, so I was behind my peers in pay, but living in the District of Columbia, my employer didn’t take that into consideration and I still had to pay rent and bills. My pension gave me parity with my peers in an expensive environment.

Obviously, few people retire at the age of 38 and never work again. On the other hand, outside some very specific career fields, veterans who retire and then enter the work force do suffer from being years behind their peers in the civilian workforce. Their wages at their new jobs reflect their entry level status there, not the 20 years experience in the service.

Furthermore, while most jobs in the military are not terribly physically grueling, many are, and it is a rare retiree who doesn’t have some dents and dings in them. The issue is serious enough that many struggle to complete a second career.

That’s not to say that the retirement system isn’t overdue for an overhaul.

One major problem with the system is that it is somewhat all or nothing. A guy who leaves the service before 20 years essentially gets nothing. Heck, most employers vest a pension*at five years.

The big problem the military faces is that people live much longer today. When the 20 year retirement was instituted, retirees had the decency to die within about 20 years, give or take, of retirement. Today, a service member who retires at 38 years of age still has a life expectancy of another 35-40 years. And who knows just how much longer that number will be in 35-40 years. Worse still, from the government’s point of view, much of that life expectancy comes from great medical care, which is expensive, and which is a cost the government is paying.

From the DoD’s viewpoint, retirees threaten to become a costly retirement program with an armed wing. The costs of service members are somewhat high while they’re on active duty. But they really become expensive after they retire. I’m actually somewhat sympathetic to that argument.

The problem is, touching the military retirement system is fraught with political dangers. It’s extraordinarily unpopular, both with veterans (even those who left long before retirement) and with the public at large.

The other thing that really, really sticks in the craw of retirees is that they provided service to the nation. Their retirement was earned. And yet they see an ever expanding number of programs that provide money and health care, not only to people that are simply poor, but even to those who flaunt the law and come here illegally. It’s not at all surprising that veterans and retirees think cutting costs there is a good first step before touching the earned benefits of our nation’s veterans.

Here’s the commission’s report:

[scribd id=254208868 key=key-mkvmUHQ67qNuilWrP4sn mode=scroll]

 

 

*Those that still have a pension, yes.

4 thoughts on “The coming battle over military retirement.”

  1. Sitting on 25 years of service and counting, every time I see these headlines I dread the word that I will come to regret continuing to serve past retirement eligibility.

    In a nice foreshadowing of the future, our housing allowance is actually getting cut this year. Granted, it is only 1%, but now rental company will be dropping their rates, even though they are all directly tied to rising rates in previous years.

  2. I went on active duty in the Navy in August 1967. In basic training they had a morning or so on pay and benefits. They explained the retirement program to us. They also explained the Hubbell plan which Congress was “on the verge of passing”.

    I got out in ’74 and they were still talking about changing the retirement plan substantially.

    From 1982 to 2004 I taught, among other things, Compensation Management in an MBA program at Roosevelt Roads Naval Station. One of the things my students were always talking about was the imminent application of major changes to the retirement system.

    This sounds like just another cry of wolf to me. Don’t nobody give me that “But this time they really mean it.” BS. I suspect that recruits joining today will still be retiring at half pay after 20 years.

    And speaking of that, in the Navy if you hit your enlistment dates just right through your career, you could retire at 18-1/2 years with credit for 20 years. It was called “Constructive time”. I think that has gone away.

    They also told us that Social Security would be bankrupt and that we would never see a nickel of it. It will still be going on much the same as today when my grandchildren hit 65.

    John Henry

  3. Oops, I should have said what the Hubbell Plan was. I remember very little of it but I think it was sort of like a 401K. We had to put money in, the govt put money in and when we hit 60 (age?) we could start getting it.

    Something like that, anyway.

    I should also say that I am against any change in the retirement benefits. Any many or woman who serves 20-30 years deserves it.

    John Henry

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