100% equities

[kork13]

Can I ask something stupid? Do most people not get the pensions from the military? Do most not make it 20 years?

I forget the accurate number, but the short answer is no. You have to stay in for 20 years to get the pension, and fewer then 20% of people who join actually stay that long. Most only stay for 4-10 years -- get experience, job qualifications, education degrees, or otherwise ... Then punch out. And the segment of society that even joins the military in the first place is extremely small -- roughly 1% of the US population.

[Atretes1]

I was talking about portfolio allocation, not net worth, but still, this chart shows that you're nowhere near 100% equities. You have a big chunk of your money in investment real estate. I don't know what "locked cash value" of the pension means but you've got at least some money allocated to cash also. I see nothing wrong with this allocation given that the pension and rental income covers your needs. I still think adding some fixed income would smooth the ride without significantly altering the return but if you're okay with the volatility, go for it.

My pension has a cash value which are my contributions. If I leave and pull my money out of the pension before retirement I get the cash value. I would never do this because I am so close to retirement. When I draw from the pension starting at 56 my cash value in it means nothing and I would just get my pension payment yearly.

[LivingAlmostLarge]

I forget the accurate number, but the short answer is no. You have to stay in for 20 years to get the pension, and fewer then 20% of people who join actually stay that long. Most only stay for 4-10 years -- get experience, job qualifications, education degrees, or otherwise ... Then punch out. And the segment of society that even joins the military in the first place is extremely small -- roughly 1% of the US population.

And can most people retire on the pension? Or is it only officers? If you were enlisted is it enough?

[Atretes1]

And can most people retire on the pension? Or is it only officers? If you were enlisted is it enough?

20 years service rank does not matter for the pension.

[LivingAlmostLarge]

20 years service rank does not matter for the pension.

Yes I know that 20 years is all you need. But does it make a difference to be enlisted or officer.

[Like2Plan]

And can most people retire on the pension? Or is it only officers? If you were enlisted is it enough?

Honestly, I don't think the average "O" would feel the pension was enough to retire on. Kork has done a really good job of saving.

Military pay consists of basic pay, housing (either $$ for housing or govt housing provided), a small amount for subsistence- plus depending on the specialty there may be other premium pays.

The retirement is a percentage of the basic pay only. Depending on which retirement system a person falls under--a 20 year retirement would most likely be less than 50% of final basic pay.

Here are a couple of links for you:

https://myarmybenefits.us.army.mil/Benefit-Library/Federal-Benefits/Retired-Pay?serv=128

https://www.sandboxx.us/blog/military-retirement-at-38-years-old/

[Atretes1]

Yes I know that 20 years is all you need. But does it make a difference to be enlisted or officer.

Enlisted, rank does not matter.

[kork13]

And can most people retire on the pension? Or is it only officers? If you were enlisted is it enough?

(**Oops, apparently this never posted earlier. Sorry for the late response!)

Not really. Most people (probably >90%) go on to a second career post-retirement; probably >90% of those do so out of need, not out of desire/interest/boredom.

As L2P said, military pensions mostly start at 50% of base pay (which is typically only 60-70% of total income). That base pay percentage does go up the longer you stay in (+2.5% per year). Also note that younger folks under the new retirement system only get 40% of base pay & +2% per year after 20 years (though they're getting TSP matching that us older members don't).

For enlisted folks, most will retire with a pension between $2.5k-$3.5k/mo. So unless both husband & wife are in the military & retire together (pretty rare for a dual-military couple to both stay in until retirement), it's tough for an enlisted person to fully retire on the military pension.

Honestly, even most officers can't do it. My pension should be around $5k/mo. That's liveable, but not comfortable. My wife's $2k/mo (medical retirement, tax free) from her 6.5 years in the military is what really makes it easily possible for us.

The exceptions are for folks who make it to really high ranks and/or stay in for a really long time (30+ years) ... or perhaps if they retire with 100% disability, which means their retirement income is completely tax free. But in that case, there may be ongoing medical costs to deal with, so disability is not a panacea.

[Atretes1]

My Sate pension pays me about 54% of my highest 3 year final average for 30 years of service. Overtime counts for that 3 year average so I've double my pension because of the OT.

[LivingAlmostLarge]

My Sate pension pays me about 54% of my highest 3 year final average for 30 years of service. Overtime counts for that 3 year average so I've double my pension because of the OT.

what will you retire with for a pension? Do you know?

Kork that makes more sense. $60k is a lot, but the $2k tax free from your wife is a bigger difference I would think since it's tax free for life for a much shorter investment of time. Yeah I can see that to live on the $60k pension you've had to live pretty lean and low cost somewhere. Even with a paid for home and paid medical tricare $60k isn't going to go far depending on where you live. I can also see that it's a great basis for retirement if you were enlisted and took that money and saved it from say age 38-48 and worked and saved more.

[Atretes1]

what will you retire with for a pension? Do you know?

Kork that makes more sense. $60k is a lot, but the $2k tax free from your wife is a bigger difference I would think since it's tax free for life for a much shorter investment of time. Yeah I can see that to live on the $60k pension you've had to live pretty lean and low cost somewhere. Even with a paid for home and paid medical tricare $60k isn't going to go far depending on where you live. I can also see that it's a great basis for retirement if you were enlisted and took that money and saved it from say age 38-48 and worked and saved more.

I can retire at 56 in 7 years. It will be at least $125,000. I'll be taxed federally but not state on that.

[Like2Plan]

As L2P said, military pensions mostly start at 50% of base pay (which is typically only 60-70% of total income). That base pay percentage does go up the longer you stay in (+2.5% per year). Also note that younger folks under the new retirement system only get 40% of base pay & +2% per year after 20 years (though they're getting TSP matching that us older members don't).

Don't most folks who are retiring these days fall under the high 3 plan (retirement annuity based on the average of the highest 36 months of base pay)?

I'm trying to remember when the blended retirement came on line--I think it has been 10 years, but I think they allowed some folks the choice to switch with earlier enter on duty (EOD) dates of 2012-2015 maybe? I am curious as to when the first folks will reach retirement under the new system. I'm sure this is being tracked- I'm kind of curious as to the participation rate up to the match. I am also curious if folks coming through this new system might be more financially savvy (or not?). I can see pluses and minuses for this new system. One plus is that most people don't stay for 20 and under the old system it is all or nothing. At least with the blended system you have a chance to take away something with less than 20. But on the other hand even if you stay for 20 (and full participation in the TSP), I think it is more likely a second career would be needed after retiring.

[LivingAlmostLarge]

I can retire at 56 in 7 years. It will be at least $125,000. I'll be taxed federally but not state on that.

That's crazy that you are retiring with $10k pension a month. That's a lot. I can see how if you aren't a officer that it's a very generous match and bonus for 20 years and I would not be unhappy having a pension of $3500. Of course it meant having to work and move for the military for 20 years.

[kork13]

Don't most folks who are retiring these days fall under the high 3 plan (retirement annuity based on the average of the highest 36 months of base pay)?

I'm trying to remember when the blended retirement came on line--I think it has been 10 years, but I think they allowed some folks the choice to switch with earlier enter on duty (EOD) dates of 2012-2015 maybe? I am curious as to when the first folks will reach retirement under the new system. I'm sure this is being tracked- I'm kind of curious as to the participation rate up to the match. I am also curious if folks coming through this new system might be more financially savvy (or not?). I can see pluses and minuses for this new system. One plus is that most people don't stay for 20 and under the old system it is all or nothing. At least with the blended system you have a chance to take away something with less than 20. But on the other hand even if you stay for 20 (and full participation in the TSP), I think it is more likely a second career would be needed after retiring.

High-3 is still the default for most people, and the BRS still determines your pension that way as well. I'm not sure about the match contribution participation. It's really the only way to come out ahead with the BRS though.

BRS came out around 2017, and people could opt into it throughout 2018. The earliest retirees inter BRS will start around 2026, but the biggest chunk of people will be 2030 & later ... The general math was that you needed to have at least 10-12 years under BRS (with maximized matching/contributions) to make up for the reduced pension, though folks with we little as 8 years left were able to opt in. For the new guys, it's obviously the only choice. But really, I do like the greater flexibility & ability to end up with more money in the end, so long as you're actively contributing & getting the match from day 1. But yes, given the structure of TSP withdrawal requirements, unless you did a 72t to access your retirement savings, BRS makes it harder to retire without having a follow-on job.

[LivingAlmostLarge]

Is the 40% pension that much less than 50%? I mean really it shouldn't impact that much and with the matching shouldn't you come out ahead?