Author Topic: Beta testers wanted: new calculator for the military's new retirement system  (Read 897 times)

Nords

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A commenter added a spreadsheet to this post on the military's new blended retirement system (coming in 2018):
http://the-military-guide.com/should-you-choose-the-military-blended-retirement-system/#comment-212279

Here's the direct link to the Google spreadsheet:
https://docs.google.com/spreadsheets/d/1cmVZ3Y4ivgyw3vs8na8RMhiLb5fj4ONV4WeBUOyrzn0/edit#gid=1153203771
It's fairly straightforward, and it's getting some constructive comments on a Bogleheads thread.  The hardest part is estimating your personal probability of staying to 20 years (cliff-vesting for the pension) but it gives you plenty of factors to tweak.

I'd appreciate feedback here or directly on the post comment.  The more people who put this spreadsheet through its paces, the faster we'll have a useful calculator as a check on whatever product DoD eventually puts out.

Boglehead Warner25 put it very well:
"I think you're over-complicating the matter. DoD is rolling this out to reduce retirement costs, and that cost-cutting must be at the expense of retiring service members. I don't believe there are any realistic assumptions you can input to make the deal look better, and I'm very put off by some DoD officials stating otherwise.
Ok, if you're certain that you'll leave service before 20 years, then it obviously makes sense to take the deal and get something vs. nothing. Short of that, I think it's best to choose the legacy system while it still exists. Examine what happens if you guess wrong about your career path: (1) Choose legacy and leave before 20, and you miss out on a few years of relatively small matching TSP contributions. (2) Choose blended and stay for 20+, and you miss out on many thousands of dollars more in retirement pay for the rest of your life."

Regardless of the numbers, DoD is still tinkering with the system.  They recently asked Congress to delay the TSP matching until the fifth year of service (instead of starting at the third year).  It's still unclear who will get the 12-year retention bonus (and how much it will be).  You should also remain skeptical of anything involving a lump-sum pension payout:
http://the-military-guide.com/beware-huge-flaws-military-blended-retirement-system/