Author Topic: Any Military Mustachians??  (Read 2989 times)

sailitaly

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Any Military Mustachians??
« on: January 20, 2015, 08:25:56 PM »
Mustachians,
  I am sure there are some Military Mustachians retired and still active.  I have just under two years left before I hit 20, and of course they are dangling a large bonus to stay for 6 more (from 19-15).  It is a very large bonus, potentially tax free, and all up front.  It is called the CSRB, or as some call it "blood money", due to the long commitment after you have reached retirement age in the military.
  I'm just getting overwhelmed with all the variables and sitting down to start calculating it brings all the "what ifs" out in full force.  This question is definitely not directed at only military, if anyone else has sound advice, I will definitely listen!  Right now after initial calculations, the difference in retirement without the bonus is 2,100/mo at 37 years old vs 3,800/mo at 42(here I would get the bonus).  I could definitely retire on 3,800/mo but 2,100/mo would push it.
 My job has it's ups and downs, but I still love it!

- A newbie Mustachian in VA Beach,

JP

mm1970

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Lkxe

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Re: Any Military Mustachians??
« Reply #2 on: January 20, 2015, 10:08:38 PM »
Answer to the first question http://forum.mrmoneymustache.com/welcome-to-the-forum/any-military-mustachians/msg286324/#msg286324  Answer to the second ? 6 years guaranteed income and higher pension, or "real" life   There's a toss up.

SaintM

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Re: Any Military Mustachians??
« Reply #3 on: January 21, 2015, 03:29:14 AM »
The answer lies in how long you (and family?) want to continue to serve.  Deployments are down across the board, but I don't know about your career field. The BS factor of sequestration, do more with less, last-minute averting pay disruptions, etc. is up.

For 5 more years of service, you get 80% more guaranteed pension plus the bonus.  You can invest the bonus and make even more.  Is the bonus only tax free if deployed?

On the other hand, what are you going to do if you retire? If the answer is FIRE, then why go on?. If the answer is go find another job to make up the pay drop plus BAH and BAS, you may want to stay where you are at.

A third option is to forgo the bonus but stay in beyond 20. Then you serve at your will, and not based upon a contract you signed.

davisgang90

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Re: Any Military Mustachians??
« Reply #4 on: January 21, 2015, 03:59:01 AM »
24 year Navy man here.

I'd say your decision depends on a lot of different factors:
What will your assignments be for the next 5 years (deployments, staff duty etc)?
Will you have to move?
Do you own a home?
What does your spouse or significant other think?
Do you want to straight up retire after the military or will you work?

The bump in pension looks like a great deal if you enjoy the positions for the next few years.  If you will be miserable, maybe not so much.

I'm in the situation I could retire this year at 25 years, but I've got orders to go and teach for 3 years at a War College which I really will enjoy, so I'm good sticking around to 28.  My pension jumps quite a bit for that extra three years so for me and my family it is a win.

DoNorth

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Re: Any Military Mustachians??
« Reply #5 on: January 21, 2015, 06:37:04 AM »
not following your math.  Assuming average high 3 of $4200/month base pay with a $2100/month pension @20 years.  6 extra years gives you a factor of 65% of your high 3  At most, the adjusted pension by retiring 6 years later would be $3000.  The bonus should not factor into the pension amount since it is handled separately. 

anyway, this really depends on whether you're going to work a bit longer.  If you don't feel like going through the hassle of finding a post military job, take the bonus, higher pension and be done for good @42 years old.  If you could make significant money in the private sector without destroying your quality of life, retire at 20, try to live off your pension and bank the rest of your private sector salary until you're FI.  Chances are, the extra six years + the crit. skills bonus is probably a better deal because the payments are higher over your lifetime and your indexed increases (COLA) are on higher amounts.  Example, my pension last year was $4895/month and almost $5000 this year after the COLA index.  If you started at $2100/month, your indexed increases are naturally smaller

rothnroll

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Re: Any Military Mustachians??
« Reply #6 on: January 21, 2015, 01:29:15 PM »
I have in 23 and I'm staying until 30+. It makes sense for me. The retirement for me almost doubles between years 20 and 30 (with a promotion or 2 added in).

Nords

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Re: Any Military Mustachians??
« Reply #7 on: January 21, 2015, 06:24:50 PM »
Welcome to the board-- does your poster name allude to the assignment officer's plans for your next duty station?

Mustachians,
  I am sure there are some Military Mustachians retired and still active.  I have just under two years left before I hit 20, and of course they are dangling a large bonus to stay for 6 more (from 19-15).  It is a very large bonus, potentially tax free, and all up front.  It is called the CSRB, or as some call it "blood money", due to the long commitment after you have reached retirement age in the military.
  I'm just getting overwhelmed with all the variables and sitting down to start calculating it brings all the "what ifs" out in full force.  This question is definitely not directed at only military, if anyone else has sound advice, I will definitely listen!  Right now after initial calculations, the difference in retirement without the bonus is 2,100/mo at 37 years old vs 3,800/mo at 42(here I would get the bonus).  I could definitely retire on 3,800/mo but 2,100/mo would push it.
 My job has it's ups and downs, but I still love it!
We might be mixing two different terms here, so let me address them separately.

First, if you're referring to the Army's Critical Skills Retention Bonus, we have a similar program for the Navy's submarine officers.  "All you have to do" is sign up for 3-5 years to earn at least $30K/year bonus pay.  We nukes have had this debate many times.  We've concluded that it's only a good deal if you're the kind of person who would do it for free anyway, especially if you like to spin a big roulette wheel (blindfolded) to choose your next duty station.  Ideally with your family next to you, also wearing blindfolds, and cheering you on as you give the wheel your spin.

Because that's essentially what you're going to do.  You're going to let the assignment officers make you their... um, their own, to be told to go anywhere and do anything for the next six years.  All you can do is grit your teeth and say "Thank you" and watch your TSP balance grow.  Even worse, you may have noticed that after 17 years of service your billet choices are a little more sparse than when you were an E-2.  You're approaching the top of the pyramid and the nasty hardship tours make up a much higher percentage of your options.  Excuse me, did I say "your" options?  I meant to say "the assignment officer's options".  They're not going to waste their time sweet-talking the other senior guys about urgent emergent openings ("Hey, what happened to the guy I'm going to take over for?") when they can just cut you CSRB guys a set of orders and move on to the next hot fill billet.

A CSRB system may be illegal under federal labor law but somehow in the military it's considered a "retention incentive". 

I suggest that if you're so valuable to the military, then perhaps you might be at least that valuable as a retired military contractor or consultant with just about any global corporation.

You might want to do a research poll.  Ask your community what percentage of the troops have signed up for the CSRB.  Then ask what percentage of them have enough money to retire without immediately starting a civilian bridge career. 

The real value of your 20-year pension is in its COLA and its cheap healthcare.  The amount of the pension is nice too, but are you really willing to sacrifice six years of your life for "just" $150K?  Look at the difference in your pension at 20 or at 25 years of service and consider how many extra dollars a year you're working for.  How many years would you have to work at a civilian career to earn $150K plus the difference in your pension?  If it's less than six years then you're giving the Army a heck of a deal.  Or how long would it take to make up that difference if you took a part-time job?  You wouldn't want to work six years of 50-hour weeks (plus deployments) if you could work a decade of 20-hour weeks.

It's only money.  You're selling not just blood (hopefully metaphorical hemoglobin) but freedom.  Take your career one tour at a time, retire when the fun stops, and then either adjust your retirement spending or start a bridge career.  You have a tremendous value of human capital, and the Army is telling you that it's worth at least $150K plus six years of salary & benefits.  Do not suffer the military inferiority complex.  I think your freedom of choice is worth far more than $150K.

I've probably hammered that point into the ground, so let me move on to the next term.

Second, if you're considering taking the Career Status Bonus and going on the REDUX retirement plan, then my advice to 99.99% of the military readers is "Run away fast."  There's a reason that DoD and the government are being so nice to you, and you'll only benefit from CSB/REDUX if you (1) stay until at least 30 years of service and (2) make E-9 or W-5 or flag/general officer.  If you're staying in uniform for those ranks, then we all know that you're not about the money anyway.

It was a marginal deal for some when it was created in 1999, but in the last 16 years the $30K bonus has been eroded by inflation to just over $21K-- before income taxes.  Note that the DoD REDUX calculator uses such optimistic values that it borders on falsehood. 

http://the-military-guide.com/2012/08/16/over-a-decade-later-redux-still-sucks/
« Last Edit: January 21, 2015, 06:27:35 PM by Nords »

sailitaly

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Re: Any Military Mustachians??
« Reply #8 on: January 21, 2015, 09:34:15 PM »
AAAAGGHHHHH!!!  I just responded to all your questions and for some reason it gave me an error and everything was lost.

Anyways, copy and paste onto word before I submit, just in case.

What does FIRE mean?

All of your input has been great.  Getting my brain moving and giving me some questions to truly ask before committing either way.

In a nutshell:
I am an E8 in the Navy with 18 years.  Good chance of promotion in the next two years.
Married with 3 kids. 15, 10, and 6
Own two homes, Primary and Rental.  We have more than 35% equity in the rental and it makes us $100/mo
Owe 26K on a Jetta TDI and 9K on a Ford Explorer.  This is our worst area because I made the mistake of buying a 2014 Ford F150 that I didn't need at all.  Was underwater but going from the Ford to the Jetta brought me from 85 a week in gas to 40 every three weeks plus 100 less on the payment.
Owe 4K in CC due to unforeseen expenses AND Christmas but will be paid off very soon.

TSP- 110K
ROTH IRA- 29K
529- 29K
Stocks- 26K

I really appreciate your responses and genuine advice!  I had this long response to everyone however it timed out and gave me an error.

My wife and I are ready for shore duty and looking forward to some much needed downtime.  I have one more deployment but it's STAFF.  The last 11 were hard and NOT staff deployments.

I am currently working on my Masters in Human Systems Engineering with Johns Hopkins University and want to consult on projects/programs when I retire retire.  Research and Development without being emotionally tied to how the company implements a project.

Being tied to the military isn't as bad as it seems however the closer I get to 20 the more I feel it is a commitment that I don't want.  I do enjoy my job still and the work level seem to level out.  Some days are long and some are short.

I really like this DoNorth-
Quote
If you don't feel like going through the hassle of finding a post military job, take the bonus, higher pension and be done for good @42 years old.  If you could make significant money in the private sector without destroying your quality of life, retire at 20, try to live off your pension and bank the rest of your private sector salary until you're FI.  Chances are, the extra six years + the crit. skills bonus is probably a better deal because the payments are higher over your lifetime and your indexed increases (COLA) are on higher amounts.  Example, my pension last year was $4895/month and almost $5000 this year after the COLA index.  If you started at $2100/month, your indexed increases are naturally smaller

Maybe only do three years to go to 40 years old, take some of the bonus.  I have to crunch some numbers

I used E9 pay for the second calculation with 30% disability.  I am quite broken, shoulder, hips, knees, ears, head.  Slowly getting fixed.

Nords-  Haha-No more Italy for my field. I was there 8 years and met my wife there. Maybe Spain!!

Quote
Second, if you're considering taking the Career Status Bonus and going on the REDUX retirement plan, then my advice to 99.99% of the military readers is "Run away fast."  There's a reason that DoD and the government are being so nice to you, and you'll only benefit from CSB/REDUX if you (1) stay until at least 30 years of service and (2) make E-9 or W-5 or flag/general officer.  If you're staying in uniform for those ranks, then we all know that you're not about the money anyway.
I didn't take this!  Someone wiser than me told me at the time to do the same thing you just told me.  RUN!!

I will be taking the poll this week, and I'm going to call the Enlisted Community Manager to see what the percentage is.

Not so sure cheap healthcare will be there for long.

Again, I wish the other post was saved.  Thank you very much for giving me input and resources to use.  I'll post some numbers up as soon as I have them, but am glad I found this site with all the knowledge.

Thanks again!!

V/r
Justin