What Do You Think About Possible Changes To The Retirement System?

According to a recent Star and Stripes article, the Defense Business Board (a 25 person panel tasked with helping the Department of Defense utilize best business practices) has recommended that the current military retirement system be seriously overhauled.  People are on fire and comments are lighting up the internet.

“As a possible fix, the review recommended the DOD test a plan that would calculate retirement pay based on a servicemember’s time in service and salary. The benefit would be payable at age 57 for those with 20 years of service and at 60 for those with less than 20 years. Under the plan, in which troops would be vested after 10 years, the DOD would annually contribute up to 5 percent of basic pay to the servicemembers’ retirement, similar to many civilian business plans.

The idea of a 30-year retirement with a possible pay-in by servicemembers is a more equitable possibility, according to Nathaniel Fick, chief executive officer for the Center for a New American Security, a Washington, D.C.-based think tank.”

Sounds pretty controversial, huh? At first glance it seems like a bad thing for military members, and it might be.  However, more of Mr. Fick’s thoughts were the subject of a  May 6, 2010 article at ForeignPolicy.com, where he writes: 

“In my admittedly anecdotal view, few (if any) good high school or college grads join the military for the promise of retirement pay, but plenty of mediocre ones decide to stay for it when they already have 10 or 12 years of service. Perverse incentive?

So can we shift the burden of those payments forward, offering better pay and recruiting incentives (better housing, better healthcare, etc) so that we at least accrue some warfighting benefit from the expense while also building in the flexibility to grow and shrink the expenditures since they’re not then a lifetime mandatory benefit? Pay for it on the back end with a graduated retirement system starting at 30-ish years, perhaps split in some way between the current defined benefit system and a career-long defined contribution system.

The result: lower and more flexible personnel costs that are heavier on discretionary spending and lighter on mandatory spending, and a system more aligned with your view (quite correct, in my opinion) that people are much more important than things — paying our young warfighters more and our “retirees” (if we can call someone in his 30s that with a straight face) less.”

That sounds a little less negative, doesn’t it?  There are so many sides to this issue that it would be impossible to talk them all out in a small forum like this.  It seems safe to say that we all understand that the country is in financial trouble, yet most military members will argue that the current retirement system is appropriate, for a variety of good reasons.

Petty Officer 1st Class Ethan Gurney, an electronics technician currently stationed in Naples, Italy, is quoted in the Stars and Stripes article:

” ‘It’s not really fair to compare military service to the civilian work force,’ said Gurney, who, at 38, is only a few months from retirement.

‘The continuous deployments, living conditions, remote and hazardous duty stations are unique to the military,’ he said. ‘This isn’t a civilian company, so any civilian model that you use to compare to the military is impertinent. To do so is irresponsible at best.’ ”

So, what do you think?  Should the retirement system should  be changed?  What changes would you recommend?  What changes would you be against?  Think outside the box here, folks.  No ideas too crazy, and please be nice.  I look forward to hearing your ideas.

For another view on the conversation, see Tom Philpott’s column, Advisory Panels Say Military Benefits Unsustainable.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Joann Gray

    No non-military workplace can compare with the military. There are the long seperation from family, these guys put their lives on the line when they’re sent to war. The new wars are a mental strain on this men, and yet you want to take away what many of them fall back on at times. Look at the job market now, some of these men only have their military retirement to live on because they can’t find a decent job outside the military. Quite a few are also depending on their medical benefits when they retire because many companies don’t offer part time employee’s benefits. Don’t quote Obama’s health care overhaul either, these guys are the same one’s that are going to be fined for not having health insurance in about 4 years if this whole 20 year retirement is done away with!

    The way I see this is that the government made a promise to these guys when they signed those enlistment papers. “Give us 20 years of your life and we’ll take care of you.” That is exactly what they take too, they don’t care that a soldier is married when they send him off on a hardship tour. Not cool changing the rules when many are already planning on this retirement plan.

  • Clay Nealy

    I spent six years in the Air Force and am now a DoD Civilian Employee. The vast majority of wasted money(ies) is being spent on non-service related “disabilities” paid to veterans. Probably 80% of the DoD employees that I know are receiving a monthly check to compensate them for some medical condition or non-service realted injury they received/developed during their time on active duty. 50% disability compensation for sleep apnea; 40% compensation to a guy who cut of part of two fingers while doing woodwork at his private residence while off-duty in the Marine Corps; 80% compensation for injuries sustained in an at-fault off duty DWI accident while on active duty with the Navy….seriously??? The system needs to be revamped completely and money needs to be invested in the troops with boots on the ground! Retirement pay is not the issue…wasteful spending on fraudulent disability claims is!

  • Tim McCarthy

    I think anyone serving over 10 honorable years should be eligible for a retirement pension at 60, whether it be a big or small pension and be retroactive! Many have served and were forced out during the cutbacks of the 80’s leaving many not knowing where to turn. I think it would if anything show a long term military vet he was appreciated for his honorable service. Just carrying the retirement card is something he/she could carry with pride and be able told to hold their heads up!

  • Jacob Kelly

    That’s just freaking lame. These guys get rich off our fighting men and then don’t even want to give them their just desserts. Someone ought to fire the hell out of these jackasses. The problem with consultants is that they consult. I don’t how many jobs I’ve seen lost to consultants in private industry, where the sign of a healthy company is a growing company.

    What will they do next? Get rid of the G.I. Bill. Save the greed for your public corporations A-holes.

    Note: I am not a member of the military.

  • PHN 68W

    Really, you must be kidding me? As much as the fools in Washington have shafted us over the years, and as much as the current group of idiots present in all branches of government tend to shaft, not only us, but the American public as well, now they are going to take the opionion of another who has not served? Here is one for the politicians to consider. When they propose things such as this, do they really wonder why many who have worn a uniform do not respect them for having not served? They are snide, believe that they are better than us. Did anyone notice during the health care debate, how much they would blow off the general public. Almost like they have some type of omnipotent power. The only people they will listen to are the unions. Maybe we should all pay dues and set up union shops, then we could be like all the other dead beats who drove the jobs to other countries. Instead of being RIF’d we could say we’ve been outsourced.

  • MeLissa Thresher

    First let me say that if you are so bent on changing retirement, how about letting ALL military members stay in to 30 years if they want. You have the best fighting force ever, highly educated, in the best shape of their lives due to new PT requirements yet you kick some of them out at 20, 24 or 26 years!

    As for changing the retirment plan, I have some ideas, how about we start at the top and work down. The President, our Commander in Chief, after only 1 term, is eligible to receive $193,400 per year for the rest of his life.

    Members of Congress are eligible for a pension when they reach the age of 50, if they’ve completed 20 years of service. Members are eligible at any age after completing 25 years of service. The starting amount of a congress Member’s retirement may not exceed 80% (EIGHTY) of his or her final salary. And that is not even including all their COLA and other perks.

    Military members only get 50% of their base pay (High 3). They are subject to living conditions all those congress members would never consider subjecting themselves to. Military must sacrifice their lives and time with their families. You can not compare military retirements to the private sector. Most military members do what they do out of patriotism and pride, because it is definitely not the paycheck.

    If you want to overhaul a retirment system, why don’t you start at the top and work your way down.

  • Chris

    I agree military life is not comparable to any civilian job. Even a military police career cannot be viewed as the same as a civilian police officer’s career. But, I think there is room for growth and change. Maybe it should be flexible based on current situations such as the economy, peacetime versus wartime, and other factors.

    Looking at what brings in new recruits is important. I think education is a great tool and benefit. What keeps people in should be considered as well. And retirement is probably one of them. But the economy drives this as well, and now even with the war ongoing recruitment and retention is good. It’s not all about the benefits which are keeping good folks in, as we currently see.

    Don’t get me wrong I like the military retirement system, and I am grateful to those who have gone before me to make it what it is today. But, as our country and the world changes around us we need to open up to change to keep our edge as a world military leader. Something I would be open to is instituting incentive percentage points for retirement. We’ve all seen folks hide out from the difficult assignments and dangerous duty while riding along to the same retirement as others. Give a base foundation percent for years and give additional percents for isolated duty assignments, combat or imminent danger time, military education and schooling, or a number of other options to max out the retirement. For example: 30% at 20 years, 40% at 30 years and 50% at 40 years, giving 50% to be spread out over different incentives. These incentives could adjust to meet the current needs of the military. This would then save on the mediocre individual who just stays for retirement and doesn’t excel while benefiting the folks who work hard for themselves and the services. Why pay bonuses when folks can increase their retirement for the tough jobs. DOD saves again and folks invest in their own future.

    I’m not an expert but during my career I’ve seen the military strive to motivate people through different incentives. Perhaps changing the retirement system from an overall benefit to an incentive benefit might help drive down costs, motivate service members to excel, and reward folks who deserve it.

    • Rich

      Look up the word “Vitality”…the military is a fighting machine not a Corporation in downtown Atlanta…you can’t have old men fighting wars…you need a continuous stream of young men!!! Gee, what is it with these individuals who have never served a lick in the military and want to judge our benefits.

  • Dave

    Tell all members of Congress to stay away from touching the retirement system! Leave it alone! Service members deserve a pension after 20 years (if they stay that long).

  • Frustrated Spouse

    As a spouse of a Retired Chief, I think it is sad the way we treat our retired veterans. Yes, some of the benefits are fantastic…Tricare, but if you want to be seen at the VA it is by space-a, and now there is talk about charging for it. Our guys gave 20 years, years they could have been out making alot more in their paychecks, and depositing into a retirement fund.

    Retirement pay, come on guys, this is not alot of pay…20 years of honorable service to our country, no I do not agree that 10 years should get retirement pay at all, unless they are wounded in action (and I don’t mean sleep apnea or cutting themselves on a saw at home…I mean on the job)…if they can’t handle the 20 years needed to receive retirement pension, they don’t get it.

    I just checked out space-a flights and I cannot understand how a DOD worker sitting at a desk gets a priority 3 & a retired vet who has put in 20 yrs (some in war zones) gets put at #6…but then, I have a problem understanding why DOD civilian employees are grouped with retired military at all…if a civilian DOD employee is ordered to report to Iraq they can quit, our military can’t do that, they took an oath to protect our country for the time they signed up for, & they do, & they deserve to be compensated for that on active duty…they also deserve a higher level during retirement, instead of taking more away from them, and putting them at the bottom of the line like they are no longer of any value! I cannot understand how any would find it respectful in any way to place a DOD civilian employee at a higher benefit level than a retiree who served our country 20+ years!

    As I said, I am a spouse, but the ridiculous law that mandates a retiree to give 50% of his/her retirement pay to his/her spouse is appalling!… I do think there are times when it is fair, but when you have a spouse who did nothing more than sit on his/her rear for 20+ years without any type of job, well, I just think that serviceman supported him/her enough those 20 yrs without having to support him/her still after divorce! In my opinion, it should be pro-rated to just how much the spouse contributed to the marriage…if he/she also worked those 20 years, then he/she deserves a portion, not 50%, as he/she was not the one going into harms way. 25% seems fair to me, and if he/she worked less, he/she should receive less. If he/she didn’t work at all, then he/she shouldn’t get anything at all.

    Thank you for letting me vent, I appologize to anyone I may have offended. I think we need to start showing much more respect to our retirees of 20+ years, and stop trying to appease the wimps that can’t make it to 20. Maybe if we started teaching the youth of today some respect, honor, and responsibility to those who are willing to put their lives on the line so they can sleep safely at home, there just might be more respect shown our active duty,our retirees, and our great country. Perhaps then our retirees will be truly honored, instead of overlooked and discarded like an old tool no longer useful! Perhaps then our youth will grow into the honorable men and women needed to make it to 20+ years.

  • Michelle

    I agree, wholeheartedly, with many of the comments above. I just retired this past month after 23 years of service. I came in back in 1987 at the age of 17 because I WANTED to serve my country. I’ve been thru quite a few wars, skirmishes, humanitarian relief ops, you name it. Being part of the medical field, I’ve been there, with boots on the ground, witness to the death and dying of my brother in arms that will stay with me for the rest of my life. Changing our retirement system to fit a civilian model is absurd. What civilian goes through what a military member does. None.

  • Jean

    my husband did his national service, and i think all men that did this should get a extra payment on there old age pension, he was in the RAF, When i see what the big brass get for a pension from the RAF, oh boy it makes my blood boil, you could share it fairly.